POVERTY REDUCTION STRATEGY TN

MONOGRAPH 6/2010 

MDGs-BASED POVERTY REDUCTION STRATEGY 

FOR TAMIL NADU 

D.K.Srivastava, K.R. Shanmugam and C.Bhujanga Rao 

MADRAS SCHOOL OF ECONOMICS 

Gandhi Mandapam Road 

Chennai 600 025 

India 

March 2010

MDGs-Based Poverty Reduction Strategy 

For Tamil Nadu 

D.K.Srivastava 

K.R. Shanmugam 

C.Bhujanga Rao 




India

MONOGRAPH 6/2010 

March 2010 

Price: Rs.200 




India 

Phone: 2230 0304/ 2230 0307/2235 2157 

Fax : 2235 4847 /2235 2155 

Email : info@mse.ac.in 

Website: www.mse.ac.in

Acknowledgement 

We are thankful to the UNDP and the Indira Gandhi Institute of Development Research 

(IGIDR) for entrusting this study to the Madras School of Economics. We have 

considerably benefited from discussions with Dr. Shovan Ray of the IGIDR, Dr. Seeta 

Prabhu, and Dr. Suraj Kumar of the UNDP, and participants from other states in the initial 

rounds of discussion for this project. 

During the course of the study we had occasion to discuss various aspects of the 

study with a number of senior officials of the Government of Tamil Nadu (GoTN). On the 

basis of the draft report we also made a presentation to the Government of Tamil Nadu 

in a meeting presided over by the Chief Secretary Mr. K. S. Sripathi, IAS. Various 

departments were represented in this meeting and based on their feedback the report 

has now been finalised. In particular, we would like to thank Dr. K. Arulmozhi, Principal 

Secretary, GoTN and Member Secretary, State Planning Commission and Mr. R. 

Vijaykumar, Principal Secretary GoTN, Planning, Development and Special Initiatives 

Department. Mr. Praveen Kumar, Special Secretary to GoTN, Department of Finance, 

provided useful inputs reflecting the fiscal concerns. Many of the relevant departments 

also provided useful inputs. In particular, we are thankful to Mr. Ramamohana Rao, 

Principal Secretary GoTN, Social Welfare and Noon Meal Programme Department, Ms. 

Apoorva, Special Secretary GoTN, Health and Family Welfare Department, Mr. 

Gagandeep Singh Bedi, Commissioner of Rural Development and Panchayat Raj 

Department, Mr. S. Sundararajan, additional Secretary GoTN, School Education 

Department, and Dr. M. Murugan, Additional Director Department of Economics and 

Statistics. 

We are also thankful to officials from the State Planning Commission. We would 

like to thank Mr. T.S. Rajasekar, Head of Division, State Planning Commission and Ms. 

G.N. Krupa, State Planning Commission. We also received research assistance from 

Aparna Sheshadri, Hanna Pushpa. P, Gajalakshmi, G., Iswaya. B., Andal, B., Merin 

Varghese, and Monisha Michael. In the preparation of the manuscript we have been 

helped considerably by Ms Sudha and Ms Jothi at the Madras School of Economics. 

We are thankful to all of them for their help at various stages in the completion 

of this study.

CONTENTS 

Acknowledgements 

Contents 

Executive Summary 

Chapter 1 Issues and Initial Conditions 1 

1.1 Introduction 

1.2 Millennium Development Goals 

1.3 Poverty in Tamil Nadu 

1.4 Current Status of Millennium Development Goals: Tamil Nadu 

1.5 Summary 

Chapter 2 Reducing Poverty: The Macro Economic Drivers 17 

2.1 Growth and Poverty Reduction: Some Lessons from the Literature 

2.2 Tamil Nadu: Growth and Structural Changes 

2.3 Growth and Poverty Reduction in Indian States: Some Empirical Results 

2.4 Inflation and the Incidence of Poverty 

2.5 Challenges of the Changing Demographic Profile 

2.6 Summary 

Chapter 3 Fiscal Reforms for Poverty Alleviation 48 

3.1 Fiscal Policies and MDGs: Some Basic Considerations 

3.2 State Finance of Tamil Nadu: An Overview 

3.3 Fiscal Restructuring for MDGs Based Poverty Reduction 

3.4. Medium Term Fiscal Reforms for MDGs Based Poverty Reduction 

3.5 Suggested Fiscal Restructuring 

3.6 Other Fiscal Reforms: From VAT to GST 

3.7 Monitoring Process of Reforms and Mid-course Corrections 

3.8 Summary 

Chapter 4 Coping with Spatial Imbalances 69 

4.1 District Level Inequalities: Human Development Index 

4.2 Gender Related Deficiencies: District-wise Profile 

4.3 Selected Demographic Characteristics of Districts 

4.4 Health Services 

4.5 Safe Drinking Water 

4.6 Incidence of Poverty: District Profile 

4.7 Implementation of NREGA 

4.8 Intra-district Imbalances: Selected Districts 

4.9 Summary 

i

Chapter 5 Water, Land and Agriculture: Issues and Impact on Poverty 98 

5.1 Natural Resources and Poverty: Linkages 

5.2 Water: Key Issues in Tamil Nadu 

5.3 Land: Key Issues 

5.4 Agriculture: Key Issues 

5.5 Summary 

Chapter 6 Last Mile Reach Strategies 124 

6.1 Targeting Strategies 

6.2 Role of BPL Surveys in Targeting 

6.3 Targeting Strategies for Tamil Nadu 

6.4 Central and Centrally Sponsored Schemes 

6.5 Reaching Households and Individuals: Micro Level Policies 

6.6 Role of Local Governments in Poverty Reduction 

6.7 Reaching the Urban Poor 

6.8 ICT–Based Initiatives for Last Mile Reach 

6.9 Summary 

Chapter 7 Summary and Formulation of Poverty Reduction Strategies 156 

7.1 Summary of Findings 

7.2 Poverty Reduction: Main Challenges in Tamil Nadu 

7.3 Tamil Nadu Poverty Reduction Strategy: A Suggested Framework 

7.4 State Level Poverty Reduction Strategy 

7.5 District Level Poverty Reduction Strategy 

7.6 Urban Poverty Reduction Strategy 

References 184 

Appendix Tables 192 

Annexures 228 

ii

List of Tables 

Table 1.1 Millennium Development Goals: Goals One to Six 

Table 1.2 Poverty Line in Tamil Nadu and All-India 

Table 1.3 Poverty Head Count Ratio: Rural: Selected States 

Table 1.4 Head Count Ratio: Urban: Selected States 

Table 1.5 Head Count Ratio: Combined: Selected States 

Table 1.6 Poverty in Tamil Nadu: Improvement Over Time 

Table 1.7 Some Summary Statistics on Calorie Intake and Poverty 

Table 1.8 Head Count Ratios of Calorie Deprivation, Alternative Norms 

Table 1.9 Human Poverty Index 

Table 1.10 State Wise Human Poverty Index 

Table 1.11 Millennium Development Goals: Position and Progress in Tamil Nadu 

Table 1.12 Selective Education Indicators 

Table 1.13 Gender Equality Indicators 

Table 1.14 Gender Composition of Work Force 

Table 1.15 Women’s Malnutrition across Major States in India: 2005-06 

Table 1.16 Health Related Medium Development Goals 

Table 2.1 Structural Changes in Tamil Nadu Economy: Share of GSDP at Constant 

(1999-00) Prices 

Table 2.2 Composition and Growth of Sectoral Employment 

Table 2.3 Average Annual Growth Rates: GSDP at Constant Prices 

Table 2.4 Changing Structure of GSDP in Tamil Nadu: Future Outlook Alternative 

Scenarios: Shares in 2014-15 and 2019-20 

Table 2.5 Regressions for the State Poverty Measures Allowing for Inter-state 

Differences in Elasticities to Non-farm Output 

Table 2.6 Per Capita Consumption Expenditure and their Gini Coefficients 

Table 2.7 Decomposition of the Head Count Ratio in 1999-00: Rural 

Table 2.8 Decomposition of the Head Count Ratio in 1999-00: Urban 

Table 2.9 Growth and the Head Count Ratio: 1993-94 to 1999-00 

Table 2.10 Inequality Measures: Head Count Ratio 

Table 2.11 Growth Inequality Poverty Connections: Rural India, 1983-1999 

Table 2.12 Growth Inequality Poverty Connections: Urban India, 1983-1999 

Table 2.13 Implicit Price Deflators in Tamil Nadu: Sectoral Prices 

Table 2.14 Terms of Trade between Agriculture, Manufacturing and Services 

Table 2.15 Tamil Nadu Projected Population Characteristics as on 1 st March: 2001-06 

iii

Table 3.1 Tamil Nadu State Finances: Selected Fiscal Aggregates 

Table 3.2 Tamil Nadu in Inter-state Comparison: Selected States: 2006-07 (RE) 

Table 3.3 Tamil Nadu Own Tax Revenues: 2002-03 to 2009-10 

Table 3.4 Grants Recommended for Tamil Nadu by the Twelfth Finance 

Commission 

Table 3.5 Expenditure on Health and Education in Tamil Nadu 

Table 3.6 Tamil Nadu Medium Term Fiscal Policy Statement: Budget 2008-09 

Table 3.7 Tamil Nadu Finances in the Medium Term: Projections 2007-08 to 2014-15 

Table 4.1 District Level Indicators: Human Development Index 

Table 4.2 Index of Deficiency: HDI Components: Ten Most Deficient Districts 

Table 4.3 Gender Development Index 

Table 4.4 Index of Gender Deficiency: Ten Most Deficient Districts 

Table 4.5 Demography Related Disabilities: Ten Most Deficient Districts 

Table 4.6 Demography Related Gender Disabilities 

Table 4.7 Health Facilities for Women in Tamil Nadu Districts 

Table 4.8 Health Facilities for Women in Tamil Nadu Districts (contd.) 

Table 4.9 Index of Districts with Safe Drinking Water and Electricity Connection 

Table 4.10 Percentage of BPL to Total Rural Population 

Table 4.11 Share of BPL Population in Total BPL Population 

Table 4.12 District-wise Share of Selected Groups in BPL Population in Tamil Nadu 

(2002) 

Table 4.13 Implementation of NREGA in Tamil Nadu Up to July 2008 

Table 4.14 Share of BPL Population in Total Rural Population: Thiruvannamalai 

Table 4.15 Block-wise Literacy Rate in Thiruvannamalai 

Table 4.16 Block-wise Gross Access Ratio of Schools 

Table 4.17 Block-wise Transition Rates: 2005-06 

Table 4.18 Block-wise IMR in Thiruvannamalai: 2003 to 2005 

Table 4.19 Block-wise Maternal Mortality Rate: 2003 to 2005 

Table 5.1 Rainfall in Tamil Nadu 

Table 5.2 Water Resources 

Table 5.3 Sources of Water Supply in Tamil Nadu (2006-07) 

Table 5.4 Access to Irrigation by Farms 

Table 5.5 Net Sown, Gross Area and Irrigation Intensity in Tamil Nadu 

Table 5.6 Net Irrigated Area by Source of Irrigation 

Table 5.7 Water Demand in Tamil Nadu 

Table 5.8 Projected Water Demand in Tamil Nadu 

Table 5.9 Rural Water Supply Status: By Habitations 

iv

Table 5.10 Status of Urban Water Supply 

Table 5.11 Expenditures According to Detailed Heads (2000-01) 

Table 5.12 Land Distribution in Tamil Nadu 

Table 5.13 Land Use Pattern in Tamil Nadu 

Table 5.14 Impact of Rainfall on Current Fallow 

Table 5.15 Total Agricultural Workers 

Table 5.16 Sectoral Profile of Employment 

Table 5.17 Employment and Labour Productivity in Various Sectors 

Table 5.18 Cropping Pattern in Tamil Nadu 

Table 5.19 Productivity (Yield) of Major Crops in Tamil Nadu 

Table 5.20 State-wise Yield Rates: Paddy, Sugarcane, Cotton and Groundnut 

Table 5.21 Yield Gap: Major Crops 

Table 5.22 Crop-wise Area Irrigated 

Table 5.23 Percentage of Area Irrigated under Crops 

Table 5.24 Fertilizer Consumption in Tamil Nadu 

Table 5.25 Estimated Per Hectare Consumption of Fertilizers in Major States 

Table 6.1 Classification Matrix: E- and F-Mistakes 

Table 6.2 Cost of Alternative Targeting Mechanisms 

Table 6.3 Poverty Rate and Targeting Errors in the 2002 BPL Classification, by 

State 

Table 6.4 Poverty Rate and Targeting Errors in the 2002 BPL Classification, by 

Expenditure Class 

Table 6.5 Some Major Central and Centrally Sponsored Poverty Reduction Schemes 

Table 6.6 Schemes for Health, Education, and Safe Drinking Water 

Table 6.7 Allocation Rules for Selected Centrally Sponsored Schemes 

Table 6.8 Core Funding Shares by States for Rural Anti-poverty Programmes 

Table 6.9 Funds Received at District Level under Various Poverty Alleviation 

Schemes in 2004-05 

Table 6.10 Selected Insurance and Pension Programs for the Unorganised Sector 

Table 6.11 Changing Share of Slum Population in Urban Population (1981 and 1991) 

Table 6.12 Changing Share of Slum Population in Urban Population (1991 and 2001) 

Table 6.13 Tamil Nadu – Distribution of Towns by Size Class, 2001 (Category-wise) 

Table 6.14 Implementing poverty Reduction Strategy: Key Interventions 

Table 7.1 Adjustment during 2007-08 and 2014-15 Projection 

Table 7.2 Urban Poverty Reduction Programmes 

v

List of Charts 

Chart 1.1 

Chart 1.2 

Chart 2.1 

Chart 2.2 

Chart 2.3 

Chart 3.1 

Chart 3.2 

Chart 3.3 

Chart 3.4 

Chart 3.5 

Chart 4.1 

Chart 4.2 

Chart 4.3 

Chart 4.4 

Chart 4.5 

Head Count Ratio in Tamil Nadu for Rural, Urban and Combined 

Urban Poor in the Total Poor in Tami Nadu 

Sectoral Growths in Tamil Nadu 

Growth Rate of Tamil Nadu GSDP and the Overall GDP Growth of the 

Economy 

Relative Movements in Sectoral Inflation Rates 

Fiscal Policies and Poverty Reduction: Direction and Factors 

Strengthening Impact 

Revenue and Fiscal Deficit as Percent of GSDP: Tamil Nadu 

Profile of Tamil Nadu State Debt Relative to GSDP 

Own Tax Revenues Relative to GSDP: Sustained Growth 

Capital Outlay as percent of GSDP: Growing but Inadequate 

Life Expectancy at Birth: Districts Arranged in Descending Order of 

Deficiency 

Literacy Rate: Districts Arranged in Descending Order of Deficiency 

GER: Districts Arranged in Descending Order of Deficiency 

Real Per Capita GDDP: Districts Arranged in Descending Order of 

Deficiency 

Human Development Index: Districts Arranged in Descending Order of 

Income 

List of Appendixes 

Appendix 1.1 Millennium Development Goals 

Appendix 1.2 (a) Poverty Line and Poverty Ratio: Tamil Nadu and All India 

(b) State-wise Poverty Line 

Appendix 1.3 Poverty Gap Estimates: Selected States 

Appendix 1.4 Some Summary Statistics on Calorie Intake and Poverty 

Appendix 1.5 Head Count Ratios of Calorie Deprivation: Alternative Norms 

Appendix 1.6 Progress towards Achieving the Poverty Goals 

Appendix 1.7 Educational Indicators 

Appendix 1.8 Women’s Malnutrition across Major States in India: 2005-06 

Appendix 1.9 Malnutrition among Ever-married Women in Major States 

Appendix 1.10 Child Mortality and Other Health Indicators 

Appendix 1.11 State-wise Mortality Rate and Health Indicators 

vi

Appendix 1.12 Maternal Mortality and Women Health Indicators 

Appendix 2.1 Per Capita Consumption Expenditure and their Gini Coefficients 

Appendix 2.2 Decomposition of the Head Count Ratio in 1999-00: Rural 

Appendix 2.3 Decomposition of the Head Count Ratio in 1999-00: Urban 

Appendix 3.1 Implementation of VAT at the State Level 

Appendix 3.2 Per Capita Expenditure on Poverty Alleviation in Tamil Nadu 

Appendix 4.1 Index of Deficiency: HDI Components 

Appendix 4.2 Index of Gender Deficiency: District-wise Relative to Tamil Nadu Average 

Appendix 4.3 Demography Related Disabilities 

Appendix 4.4 Demography Related Gender Disabilities 

Appendix 4.5 Health Facilities for Women in Tamil Nadu Districts 

Appendix 4.6 Health Facilities for Women in Tamil Nadu Districts (contd.) 

Appendix 4.7 Efficiency Scores of District Public Health Systems in TN: 2006-07 

Appendix 4.8 Index of Districts with Safe Drinking Water and Electricity Connection 

Appendix 4.9 Employment under NREGA and Share of BPL Population 

Appendix 4.10 Thiruannamalai: Index of Relative Deficiency in Literacy 

Appendix 5.1 Major and Medium Irrigation Projects in Tamil Nadu: Selected List 

Appendix 6.1 Status of Self Help Groups in Tamil Nadu: Physical and Financial 

Achievements 

Appendix 7.1 Indices for District-wise Allocation According to Relative Deficiencies 

List of Annexures 

Annexure 1.1 Poverty Measures: Axiomatic Framework: Definitions 

Annexure 1.2 Poverty Line: Concept and Measurement 

Annexure 1.3 Uniform Recall Periods and Mixed Recall Period 

Annexure 1.4 Human Poverty Index 

Annexure 4.1 Tamil Nadu Districts Administrative Organisation 

Annexure 4.2 Methodology and Definitions 

Annexure 4.3 Some MDG Indicators for Sivagangai District 

Annexure 5.1 Environmental Consequences of Excess use of Fertilizers 

Annexure 6.1 Notes of Selected Centrally Sponsored Schemes 

vii

EXECUTIVE SUMMARY 

This study aims to develop a poverty reduction strategy for Tamil Nadu in the context of 

the Millennium Development Goals (MDGs). While Tamil Nadu fares relatively well in 

terms of the key MDG indicators, there is still considerable ground to cover. We first 

review the trends in poverty reduction in Tamil Nadu with a view to identifying the 

distinguishing features of Tamil Nadu for evolving an MDGs-based approach to poverty 

reduction. 

Tamil Nadu: Trends in Poverty Reduction 

Trends in poverty reduction in Tamil Nadu over time and in comparison to other states 

may be summarised as follows. 

1. Reduction in rural poverty in Tamil Nadu accelerated after 1983. During the period 

from 1983 to 2004-05, rural poverty head count ratio in Tamil Nadu fell by nearly 30 

percentage points whereas the corresponding reduction in the all-India rural head 

count ratio was only 17 percentage points. 

2. Reduction in urban poverty in Tamil Nadu picked up sharply after 1993-94 but the fall 

in the head count ratio during 1993-94 to 2004-05 was much less in Tamil Nadu 

compared to the corresponding reduction in the all-India poverty urban head count 

ratio. 

3. The absolute number of urban poor in Tamil Nadu is more in 2004-05 as compared 

to 1973-74. There is a discernable trend toward urbanisation of poverty, measured 

by the percentage urban poor to total poor, which has increased from nearly 30 

percent in 1973-74 to nearly 47.5 percent in 2004-05. 

4. In relation to other millennium development goals (MDGs), some notable features 

are: 

a. The infant mortality rate was 15 in Tamil Nadu compared to 77 for all-India in 

rural areas and 22 for Tamil Nadu compared to 45 for all-India in urban areas. 

b. The dropout rate in class 1-10 was 41.7 per cent for Tamil Nadu, compared to 

59.9 for All-India in 2006-07. 

c. In terms of gender disparities, Tamil Nadu’s performance is comparatively better. 

The gender ratio was 98.6 in 2001 and the female literacy rate was 63.4. 

d. The incidence of HIV/Aids is disturbing with total number of reported cases more 

than fifty thousand, which are differentially distributed across districts, with 

Chennai alone having nearly one-fifth of the total reported cases. 

e. With growing urbanization, a major problem would be providing safe drinking 

water in urban areas with high density of population. 

viii

MDGs-Based Poverty Reduction: Main Challenges in Tamil Nadu 

In developing a suitable strategy of poverty reduction in the context of achieving the 

MDGs, some of the main challenges for Tamil Nadu are: 

a. Poverty reduction has to aim at a sustained increase in incomes rather than 

delivering a bunching of people just above the official poverty line who will 

remain vulnerable to a variety of exogenous shocks. 

b. Poverty reduction has to be strategised in a multi-dimensional framework 

covering education, health, access to public services and safe drinking water. 

Therefore, fiscal reforms will have to play a key role. 

c. In Tamil Nadu, poverty is becoming progressively urbanized. The rural poverty 

reduction programmes cannot be fully replicated in the urban areas. Different 

strategies need to be developed for the poor living in the slum and non-slum 

areas. 

d. The overall demographic structure is changing in Tamil Nadu such that the share 

of working age population will be increasing in the medium term and the share of 

older people will increase in the longer run. These changes require massive 

investment in education first and health in the longer run. 

e. There are considerable inter-district and intra-district differences in the poverty 

profile as well as education, health and gender related deficiencies, and the 

relative positions of districts are quite different in terms of different indicators. 

f. In Tamil Nadu, water scarcity and land degradation are two major constraints 

that affect agriculture in the state, which impact the poor more than others. 

Strengthening Growth 

In Tamil Nadu, as in India as a whole, the structure of the economy is shifting away from 

agriculture. Growth in employment in the primary sector in Tamil Nadu has been negative 

in recent years whereas in secondary and tertiary sectors has been positive and relatively 

high. The basic challenge in the context of the changing structure of the economy and 

employment is to create the capacity to absorb the population migrating out of 

agriculture into industry and services with proper training and skill development. At the 

same time, productivity in agriculture should not be allowed to fall. This will require 

considerable additional investment in agriculture where government will have to play a 

key role as the returns will not be adequate to attract large inflows of private capital into 

agriculture. Higher growth, particularly in the non-agricultural sectors, has been shown 

to have a significant direct impact on reducing poverty in Tamil Nadu. 

ix

Fiscal Reforms for Poverty Reduction 

Fiscal reforms and restructuring can strengthen growth, and MDGs-based poverty 

reduction can be achieved by emphasizing human development. These changes are 

interdependent: expenditure on education and health accommodates absorption of 

labour in the non-agricultural sectors. This strengthens the growth momentum, 

generating additional revenues for the government for undertaking the required 

expenditures on health and education as well as capital expenditures. We suggest the 

broad contours of fiscal restructuring in the medium term covering the fiscal profile from 

2007-08 to 2014-15 with the following main features: 

a. Consistent with the FRBM targets, keeping fiscal deficit at 3 percent of GSDP with 

some revenue account surplus, capital expenditure can be increased to a level 

close to 4.6 percent of GSDP by 2014-15. This will not cause any increase in the 

debt-GSDP ratio, which remains below 23 percent. 

b. In combination with buoyant revenues, with buoyancy marginally above 1, 

expenditure on education and health can be increased from 2.56 and 0.66 

percent of GSDP in 2007-08 RE, respectively, to nearly 5 percent of GSDP in the 

case of education and a little less than 1.3 percent in the case of health. This will 

however necessitate some reduction in other social and economic services but 

some restructuring within this group can accommodate increase in expenditure 

on water supply and sanitation. 

c. Other components of fiscal structuring would include reduction in interest 

payments, reforms in subsidies, continuous monitoring of non-tax revenues, 

linked to increases in the cost of providing services, and preparation for the 

implementation of the Goods and Services Tax (GST). 

Coping with Inter-district and Intra-district Imbalances 

There are considerable inter-district and intra-districts differences in Tamil Nadu in 

respect of the incidence of poverty, nature and level of economic activities, education, 

health and gender development indicators. The following are some of the major 

highlights of inter-district deficiencies in Tamil Nadu. 

a. In terms of real per capita Gross District Domestic Product (GDDP), indicative of 

income differences, the most deficient five districts are: Villupuram, 

Thiruvannamalai, Dharmapuri, Krishnagiri, and Thiruvarur. Relative to the 

average, the differences across districts in per capita GDDP are quite large. 

x

. In terms of share of below poverty line (BPL) population to total rural population, 

the districts with the highest incidence are: Ramanathapuram (59.5 percent), 

Madurai (42.8 percent), Perambalur (39.5 percent), Karur (37 percent), and 

Kanchipuram and Sivagangai (35 percent). 

c. For electricity connectivity, the most deficient districts are: Thiruvarur, 

Nagapattinam, Pudukkottai, Ariyalur, and Ramanathapuram. 

d. In terms of the gross enrolment ratio, the five most deficient districts are: 

Thiruvannamalai, Villupuram, the Nilgiris, Krishnagiri, and Vellore. Relative to the 

average, the per capita differences in gross enrolment ratio (GER) are limited. 

e. In terms of literacy rate, the five most deficient districts are: Dharmapuri, 

Krishnagiri, Villupuram, Perambalur, and Erode. Inter-district differences in 

literacy relative to the average are nearly twice as large as in the case of GER. 

f. For life expectancy at birth (LEB), the five most deficient districts are: Theni, 

Dindigul, Virudhunagar, Ramanathapuram, and Namakkal. In this case also, the 

inter-district differences are limited. 

g. For population of children in the age group 0-6, the neediest districts are: 

Dharmapuri, Ariyalur, Pudukkottai, Ramanathapuram and Villupuram. 

h. For provision of safe drinking water, the neediest districts are: Ramanathapuram, 

Kanniyakumari, Thiruvallur, the Nilgiris and Sivagangai. 

i. In terms of the gender development index (GDI), the five most deficient districts, 

taking into account all the determinants of GDI are: Dharmapuri, Villupuram, 

Krishnagiri, Thiruvannamalai, and Perambalur. 

In all these cases, the relative position of all the districts in Tamil Nadu in terms of an 

index of deficiency has been provided in this study. In terms of different indicators of 

achievements and needs, the relative order of districts often varies over a large range. 

Also, it is not the same district that is relatively most deficient in all respects although 

there are some districts that appear in the list of most disadvantaged in several respects 

like Dharmapuri, Ramanathapuram, Thiruvannamalai, Villupuram, and Perambalur. 

Water, Land and Agriculture 

Tamil Nadu is a water scare state with per capita water availability of 900 cubic meter 

(cm) as against the all-India average of 2200 cm. The total water resource of the state is 

42.23 billion cm (surface water 24.1 bcm and groundwater 23.1 bcm) and the total water 

demand already exceeds the availability and the deficiency is 307.8 thousand million 

cubic feet. Agriculture is the largest user (above 90 percent) of water. Water, land and 

agriculture have strong linkages with poverty reduction. Most poor particularly in the 

xi

ural areas, rely heavily on natural resources - land, and water and agriculture for their 

livelihood. Therefore, meeting MDGs will depend in large part as to how the State 

manages its scare water resources and how it develops effective water governance and 

improved water supply services. Managing and developing water resources, in the 

context of its heavy demand from agriculture as well as industry and providing drinking 

water of acceptable quality and adequate quantity are of critical importance for an MDGsbased 

strategy of poverty reduction in Tamil Nadu. 

Last Mile Reach Strategies 

Last mile reach strategies are aimed at catering to those poor who are unable to take full 

advantage of the general growth processes and fiscal interventions. In order to ensure 

that they reach minimum acceptable levels of the MDGs, we need specialised 

programmes, identify the targeted sections of population, allocate suitable funds, and 

administer the programmes. While there are many central, centrally sponsored, and state 

schemes for poverty alleviation, health, education, and gender related concerns, there 

are issues about inefficient fund allocation, overlapping and multiplicity of schemes, bypassing 

of states, and implementation inefficiencies. 

In this study a four-tier targeting strategy leading to identification of deficient 

districts, blocks/urban agglomerations, villages/zones/slums, and finally 

households/individuals is suggested. It is highlighted that there are considerable 

efficiency gains by changing the strategy of allocation of funds, which should depend on 

(a) the share of targeted beneficiary population in the concerned area or segment, and 

(b) the extent of relative deficiency. Allocations should be with reference to specific goals 

relating to income deficiency, health, education and gender, rather than on the basis of 

aggregate and weighted indices. For improving implementation and allocation efficiency, 

extensive use of information and communication technologies should be made. 

MDGs-based Poverty Reduction Strategy (PRS) 

With these considerations in mind, a MDGs-based poverty reduction strategy is 

spelt out consisting of six steps abbreviated as MASTER. This is detailed below. 

a. Macro Drivers: Managing macro drivers, particularly growth, and 

improving its ‘inclusiveness’ by increasing the connectivity of the poor to 

the growth processes. 

b. Augmenting Fiscal Space to increase primary expenditures relative to 

GSDP. 

c. Structuring government expenditure towards MDGs (increasing the share 

xii

of expenditure on public goods like law and security and merit goods like 

health and education, and capital outlay for infrastructure and away from 

excessively subsidized private goods). 

d. Targeting of programmes towards specific areas and sections of poor; a 

four-tier targeting strategy with special focus on urban areas will be 

effective in Tamil Nadu. 

e. Efficiency enhancement by exploring scope for design, allocation, and 

implementation efficiencies. 

f. Reforming Poverty Reduction Programmes: reforming state schemes and 

taking maximum advantage of central and centrally sponsored schemes, 

and developing specialized programmes for the urban poor. 

This scheme is developed for state level poverty reduction in rural areas (SPRS), 

district level poverty reduction in rural areas (DPRS-R) and urban poverty 

reduction at the state and district level (UPRS). 

A: State Level Poverty Reduction Strategy (SPRS):Overall and Rural Areas 

M: It is desirable for Tamil Nadu to aim at a growth rate that is at least 0.5 to 1.0 

percentage points higher than the National Gross Domestic Product (GDP) growth rate on 

a sustained basis. If the real GDP growth rate is likely to average at about 9 percent 

(leaving out the current slowdown phase), the Tamil Nadu GSDP should aim at 9.5 to 

10.0 percent per annum in the medium term. Given Tamil Nadu’s relatively lower growth 

of population, this could translate into growth in per capita incomes of about 1.5 to 2.5 

percentages above the average for India. 

A: It is possible that additional fiscal space for undertaking higher primary expenditures 

relative to GSDP can be created, comparing the 2007-08 RE and 2014-15 projections. Of 

this, nearly one percentage point of GSDP can come from the revenue side and about 0.5 

percent of GSDP from lower interest payments. It is shown that primary (non-interest) 

expenditure, considering revenue and capital expenditure together, can grow from 16.5 

percent of GSDP in 2007-08 RE to about 19.1 percent in 2014-15. 

S: In particular, based on a set of assumptions, expenditure on education can be 

increased from about 2.6 percent of GSDP in 2007-08 RE to close to 5 percent of GSDP 

by 2014-15. In the case of health (Medical and Public Health and Family Welfare), 

expenditure can be raised from 0.66 percent of GSDP in 2007-08 to 1.27 percent, 

implying a near doubling of the share relative to GSDP. Capital expenditure (net of 

xiii

epayments) may be raised from 2.9 percent of GSDP to 4.6 percent during the same 

period. In contrast, expenditure on interest payments and pensions relative to GSDP 

would be reduced. 

T: We suggest a four-tier targeting strategy: District Level (separately for urban and rural 

poverty reduction), from District to Blocks (Taluks), from blocks to villages, and from 

village to households or individuals. 

E: Efficiency can be thought of in terms of (a) design efficiency, (b) allocation efficiency, 

and (c) implementation efficiency. It is suggested that reforming allocation strategies for 

different sectors, using indices of deficiency at the district level can result in considerable 

efficiency gain. 

R: In addition to the more efficient use of existing central and state schemes: two 

additional schemes are suggested. For the extremely poor, direct cash transfer in the 

form of ‘social income’ or ‘social benefit’ may be administered to the first two deciles of 

the BPL population in the rural areas. It is important that the extremely poor have some 

minimum income for meeting access costs and overcoming participation barriers to avail 

the benefits of other services provided by the government. Secondly, for all poor a 

scheme for providing an income generating assets workable within the house like 

providing an electricity generating charkha (e-charkha) would generate considerable 

supplementary income within the household. 

B: District Poverty Reduction Strategy (DPRS – Rural) 

M: Some basic industrial and service sector activity is needed to generate employment 

and multiplier effects in districts characterized by low level of economic activities. 

Location of an SEZ/Export oriented zone or attracting industry with special tax 

concessions will initiate the necessary stimulus in the income-deficient districts. 

Availability of good road connectivity and power are also important ingredients. 

A: Fiscal resources come from higher tier governments. There is scope for developing 

own tax and non-tax revenues. 

S: Each district needs to restructure expenditure towards areas where its deficiency is 

largest relative to other districts. 

T: Targeting has to be from district to blocks, from blocks to villages and from villages to 

xiv

households or individuals. For each MDG (income-poverty, education, health, and 

gender) targeting has to be differentiated according to relative deficiencies. 

E: There is clear scope for obtaining allocation efficiency through construction of relative 

deficiency indices in respect of income-poverty, health, education, and gender related 

indicators at the level of blocks. An approach similar to one suggested for the state level 

(allocation among districts) should be followed for block level allocations. It should 

depend on (a) relative extent of deficiency and (b) share of beneficiary population. 

R: District level authorities, apart from implementing the ongoing programmes, may 

implement two additional programmes for cash benefits for the extremely poor and 

provision of income generating asset that can be operated within the dwelling. 

C. Urban Poverty Reduction Strategy (UPRS) 

It is clear that people migrate to the urban areas for better income-earning opportunities 

as also for better education opportunities. The urban strategy has to cover both slum and 

non-slum areas. The hierarchical structure for designing an urban PRS-MASTER can be 

indicated as below. 

M: This will require development of wide-intersection free roads, network of higher 

education and technical education institutions, additional hospitals, additional power 

generation, and adequate water supply. Adequacy of power and skilled labour will 

provide stimulus to investment in the concerned area. Cities should be expanded around 

the periphery with ring roads and road networks. Location of industrial clusters around 

the periphery of towns and social infrastructure (hospitals, schools) will help generate 

necessary multiplier effects. 

A: The municipal budgets have to provide increased allocation for slum rehabilitation, city 

roads, and development. For undertaking capital expenditure on urban infrastructure, 

municipal debt may be utilized at least for the larger cities. 

S: As far as health and education are concerned, there are some hospitals and schools, 

which may be under the control of the city administration. Children living in slum areas 

are often forced to discontinue education and start doing some work. Hygienic conditions 

in slum areas are also a challenge. Major expenditure has to go for dismantling of illegal 

slums and rehabilitation activities. Location of new schools close to the clusters where 

poor may reside will also help. 

xv

T: The four tier targeting strategy (District – Cities/Town – Slum/Non-slum Zones/Wards 

– Households) should focus on towns according to size of population of the poor, and 

devise separate targeting strategies for the slum population and the poor in the non-slum 

areas. For the slum population, location-specific schemes may work. For non-slum 

population targeting can be for extremely poor households or individuals. Targeting slum 

population is more straightforward because the geographic location of the cluster is 

identifiable. Non-slum poor are diffused all over the urban agglomerations. Information 

from NGOs operating in the concerned areas may be valuable for reaching the urban 

non-slum poor. 

E: Allocation of funds under different schemes should be according to the estimated 

number of poor in the slums and the extent of relative deficiency. For the non-slums 

poor, in the urban agglomerations separate schemes may be used. Here, well publicized 

self-targeting schemes may be most effective. Allocations should be made separately 

under respective criteria for health, education, income, and gender related schemes. 

R: Slum rehabilitation rather than providing additional facilities in existing slums should 

be the priority in designing programmes. Self-targeted programmes would work better 

for non-slum population of the urban poor. Anticipating continued migration to urban 

areas, satellite townships in the periphery of cities should be developed pro-actively 

rather than allowing additional slums to develop. 

xvi

Chapter 1 

ISSUES AND INITIAL CONDITIONS 

1.1 Introduction 

The study aims to formulate a strategy for poverty reduction in Tamil Nadu in the context 

of achieving the Millennium Development Goals (MDGs). For analytical convenience, the 

study is divided into six parts: (a) initial conditions in Tamil Nadu regarding the relevant 

MDGs, (b) macro-economic drivers affecting poverty, particularly growth and inflation, (c) 

strategy for fiscal intervention for MDGs-based poverty reduction, (d) coping with spatial 

imbalances, (d) Tamil Nadu’s special features regarding land, water, and soil, and (f) last 

mile reach strategies. 

Tamil Nadu, the southernmost state in the Indian subcontinent with an estimated 

area of 0.13 million sq. km, is one of the comparatively developed states in the country. 1 

Tamil Nadu makes up only 4 percent of India’s land area but accounts for almost 6.1 

percent of the India’s population of 1029 million (2001). It ranks third in terms of 

industrial development and fifth in terms of per capita income (GSDP) among the major 

states. Its GSDP has come largely from the non-agricultural sector. Its population is one 

of the most urbanized in the country with the share of urban population at 44 percent 

compared to 28 percent for India as a whole. Tamil Nadu has also done very well in 

terms of human development. 2 It ranks second in terms of infrastructure development 

index (Ghosh and De, 2000). 

In this chapter we consider the Millennium Development Goals (MDGs) as the 

standards and then consider the current position of Tamil Nadu in regard to the specific 

MDGs and highlight the ground that remains to be covered. 

1.2 Millennium Development Goals 

In September 2000, the member countries of the United Nations including India adopted 

the Millennium Declaration, which set out the Millennium Development Goals (MDGs) and 

the related targets for reducing poverty by 2015. 3 The MDGs are composed of eight 

1 Tamil Nadu ranks 11 th among the states of India in size. 

2 For instances, Tamil Nadu ranks near top in terms of health and family welfare indicators such as low birth rate, infant 

mortality rate and maternal mortality rate. It population growth during 1990s was 1.1 percent as against the 1.97 percent 

for the country as a whole. It ranks third in term of human development index. 

3 All progress would be measured using 1990 as the base year and all goals should be achieved in 2015. 

1

fundamental goals, divided into 18 specific targets, designed to serve as a blueprint and 

plan of action. Achievement of the MDGs will end extreme poverty worldwide by 2015. 

The World Summit on Sustainable Development held in Johannesburg, South Africa in 

September 2002 endorsed the MDGs as a basic pillar of the global sustainable 

development agenda. 

Table 1.1: Millennium Development Goals: Goals One to Six 

Goals and Targets 

Indicators 

Goal 1: Eradicate Extreme Poverty and Hunger 

Target 1: Halve the proportion of 1. Proportion of population below $1 (PPP) per day 

people whose income is less than 1 2. Poverty Gap Ratio (=incidence x depth of poverty) 

dollar a day 

3. Share of poorest quintile in National income or consumption 

Target 2: Halve the proportion of 4. Prevalence of underweight children (under 5 years of age) 

people who suffer from hunger 5. Proportion of population below minimum level of dietary energy 

consumption 

Goal 2: Achieve Universal Primary Education 

Target 3: Ensure that all boys and 

girls will complete a full course of 

primary schooling 

Goal 3: Promote Gender Equality and Empower Women 

Target 4: Eliminate gender 

disparity in primary and secondary 

education preferably by 2005 and 

to all levels by 2015 

Goal 4: Reduce Child Mortality 

Target 5: Reduce by two-thirds, 

between 1990 and 2015, the 

under-five mortality rate 

Goal 5: Improve Maternal Health 

Target 6: reduce by three-quarters, 

between 1990 and 2015, the 

mortality ratio 

6. Net enrolment ratio in primary education 

7. Proportion of pupils starting grade 1 who reach grade 5 

8. Literacy rate of 15-24 years old 

9. Ratio of girls to boys in primary, secondary and tertiary education 

10. Ratio of literate females to males of 15-24 year olds 

11. Share of women in wage employment in the non-agricultural 

sector 

12. Proportion of seats held by women in national parliament 

13. Under-five mortality rate 

Goal 6: Combat HIV/AIDS, Malaria and Other Diseases 

Target 7: Have halted by 2015, 

and begun to reverse, the spread 

of HIV/ AIDS 

Target 8: Have halted by 2015, 

and begun to reverse, the 

incidence of malaria and other 

major diseases 

14. Infant mortality rate 

15. Proportion of 1 year old children immunized against measles 

16. Maternal mortality ratio 

17. Proportion of births attended by skilled health personnel 

18. HIV prevalence among 15-24 year old pregnant women 

19. Contraceptive prevalence rate 

20. Number of children orphaned by HIV/ AIDS 

21. Prevalence and death rates associated with malaria 

22. Proportion of population in malaria risk areas using affective 

malaria prevention and treatment measures 

23. Prevalence and death rates associated with tuberculosis 

24. Proportion of TB cases detected and cured under DOTS (Directly 

Observed Treatment Short Course) 

Source: United Nations Development Programme. 

2

The first three goals relate to eradication of poverty and hunger, education, and 

gender equality. Goals four to six relate to health focusing on reducing child mortality, 

improving maternal health, and combating HIV Aids, Malaria and other diseases. These 

goals are then converted into eight targets for which alternative indicators have been 

proposed. Goals seven and eight relate to environmental sustainability and partnership 

for global development. These are converted into ten additional targets. The first six 

goals and related targets alongwith their relevant indicators are summarized in Table 1.1. 

The complete set of the MDGs are given in Appendix Table 1.1. 

In this study, the focus will be on poverty reduction in a multidimensional 

perspective covering health, gender, and education issues for which the first eight targets 

are relevant. In the context of analysis of water, land, and soil in Tamil Nadu, we will 

discuss some critical issues relating to environmental sustainability. Subject to data 

constraints, we will examine the progress in the respect of the suggested indicators. 

1.3 Poverty in Tamil Nadu 

Poverty as a multidimensional concept refers to lack of access to the basic needs of food, 

shelter, security, education, health services, safe drinking water, sanitation for a decent, 

normal and effective existence. Conventional measures of poverty, however, are 

narrowly defined making reference to a poverty line based on income thresholds 

consistent with a certain level of consumption of food. Given the poverty line, various 

indicators are used to measure the incidence of poverty such as head count or poverty 

ratio, poverty gap index, squared poverty gap, Sen index, Kakwani index, Takayama 

index, Foster, Greer, and Thorbecke (FGT) index. The head count ratio, giving the 

number of poor as percent of the total population is the most frequently used summary 

measure of poverty. The ‘poverty-gap ratio’, indicates the average depth of poverty, 

incorporating not only the number of poor as proportion of the total population but also 

the difference between the poverty line and the mean income of the poor on average. 

Other measures of poverty take into account distributional considerations within the 

population of poor with alternative weighting schemes. Annexure 1.1 provides axiomatic 

framework relating to definitions of poverty measures and Annexure 1.2 summarizes a 

list of selected measures of poverty mathematically. These measures of poverty are 

absolute measures of poverty. In addition, several relative and ‘hybrid’ measures of 

poverty have also been proposed. 

a. Poverty Line 

In measuring the incidence of poverty, estimating a poverty line is critical. A person is 

defined as poor if his/her average income/consumption is less than a pre determined 

3

threshold. Details of measurement of the poverty line in India (and various states) are 

given in Appendix Tables 1.2 (a) and (b). 

The rural poverty line for Tamil Nadu was equal to Rs. 196.53 in 1993-94 and Rs. 

351.86 in 2004-05 (Table 1.2). In terms of purchasing power parity dollars (PPP $ = Rs. 

7.02 in 1993), these figures translate into 0.93 PPP $ per day per capita in both the years 

1993-94 and 2004-05 [see Appendix Table 1.2 (a)]. The urban line was estimated at 

Rs. 296.63 in 1993-94 and Rs. 547.42 in 2004-05. These values translate into 1.41 PPP $ 

and 1.44 PPP $. 

Table 1.2: Poverty Line in Tamil Nadu and All-India 

(Rs. per capita per month at current prices) 

Years 

Rural 

Urban 

Tamil Nadu All India Tamil Nadu All India 

1973-74 45.09 49.63 51.54 56.76 

1977-78 56.62 56.84 67.02 70.33 

1983 96.15 89.90 120.30 115.65 

1987-88 118.23 115.20 165.82 162.16 

1993-94 196.53 205.84 296.63 281.35 

1999-00 307.64 327.56 475.60 454.11 

2004-05 351.86 356.30 547.42 538.60 

Source: Planning Commission and Government of India, Press Information Bureau. 

In 1993-94, the average Indian poverty line was estimated at Rs. 205.84 per 

capita per month for rural and Rs. 281.35 for urban areas. In 2004-05, it was equal to 

Rs. 356.3 (= Rs.198 in 1993-94 prices) in rural and Rs. 538.6 (= Rs. 299 in 1993-94 

prices) in urban areas. In terms of purchasing power parity dollars, per day rural poverty 

line for the country declined from 0.98 PPP $ to 0.94 PPP $ and per day average urban 

poverty line increased from 1.34 PPP $ to 1.42 PPP $. If we take the average figure for 

the country, the Indian poverty line is close to the international poverty line used by the 

World Bank (Bhalla, 2005). 

It is observed that rural poverty line for Tamil Nadu was slightly lower than the 

average rural line for the country while urban line for Tamil Nadu was slightly higher than 

the average line for the nation [Appendix Table 1.2 (b)]. 

4

. Poverty in Tamil Nadu: Inter-state and Over Time 

In order to evaluate the progress made by Tamil Nadu, it is useful to compare the 

progressive reduction in poverty in terms of the Head Count Ratio (HCR) in Tamil Nadu 

over time as well as in comparison to other major states in India. We review the progress 

in poverty by examining rural, urban, and combined incidence of poverty. 

Table 1.3 gives the progress in reducing rural poverty in Tamil Nadu as well as 

selected other states as measured by the HCR. During the period 1973-74 to 1983 the 

reduction in rural poverty in Tamil Nadu was comparatively less amounting to about 3.4 

percentage points from 57.4 to 54 percent. In contrast, in this period, the reduction in 

the all-India rural poverty HCR was more than 10 percentage points from 56.4 to 45.7 

percent. It is during the period 1983 to 2004-05 that reduction in Tamil Nadu poverty 

(HCR) was more than 30 percentage points from 54.0 percent to 22.8 percent. In 

contrast, the all-India reduction in rural poverty amounted to only about 17 percentage 

points from 45.7 to 28.3 percent. Among the southern states, Tamil Nadu had the 

highest rual HCR in 2004-05. In Table 1.3 we are not using the 1999-00 figures because 

the official figures are based on mixed recall period (see Annexure 1.3 for a note on the 

recall period controversy). 

Table 1.3: Poverty Head Count Ratio: Rural: Selected States 

(Percent) 

States 1973-74 1977-78 1983 1993-94 2004-05* 

Andhra Pradesh 48.41 38.11 26.53 15.92 11.2 

Bihar 62.99 63.25 64.37 58.21 42.1 

Gujarat 46.35 41.76 29.80 22.18 19.1 

Haryana 34.23 27.73 20.56 28.02 13.6 

Karnataka 55.14 48.18 36.33 29.88 20.8 

Kerala 59.19 51.46 39.03 25.76 13.2 

Madhya Pradesh 62.66 62.52 46.90 40.64 36.9 

Maharashtra 57.71 63.97 45.23 37.93 29.6 

Orissa 67.28 72.38 67.53 49.72 46.8 

Punjab 28.21 16.37 13.20 11.95 9.1 

Rajasthan 44.76 35.32 33.50 26.46 18.7 

Tamil Nadu 57.43 57.88 53.99 32.48 22.8 

Uttar Pradesh 56.53 47.60 46.45 42.28 33.4 

West Bengal 73.16 68.34 63.05 40.80 28.6 

All India 56.44 53.07 45.65 37.27 28.3 

Source (Basic Data): Government of India, Press Information Bureau. * For 2004-05, data for Bihar, Madhya 

Pradesh and Uttar Pradesh exclude data for Jharkhand, Chhattisgarh and Uttarkhand respectively. 

5

In regard to reduction in the urban poverty HCR, again the reduction was 

marginal during the period 1973-74 to 1983 (Table 1.4). Even up to 1993-94, the 

reduction was just about 10 percentage points compared to the 1973-74 figures. During 

this period, the all-India performance of reducing urban poverty was comparatively better 

as the HCR fell from 49 percent to 32.4 percent. It is after 1993-94 that the reduction in 

urban poverty in Tamil Nadu was far sharper compared to the all-India figure. In this 

period, in Tamil Nadu the reduction in urban HCR amounted to more than 17 percentage 

points whereas the corresponding figure for the all-India urban poverty was less than 7 

percentage points. 

Table 1.4: Head Count Ratio: Urban: Selected States 

(Percent) 

States 1973-74 1977-78 1983 1993-94 2004-05* 


Bihar 52.96 48.78 47.33 34.50 34.6 

Gujarat 52.57 40.02 33.14 27.89 13.0 

Haryana 40.18 36.57 24.15 16.38 15.1 

Karnataka 52.53 50.36 42.82 40.14 32.6 

Kerala 62.74 55.62 45.65 24.55 20.2 


Maharashtra 43.87 40.03 40.26 35.15 32.2 

Orissa 55.62 50.32 49.15 41.64 44.3 

Punjab 27.96 27.32 23.79 11.35 7.1 

Rajasthan 52.13 42.53 37.94 30.49 32.9 

Tamil Nadu 49.40 46.69 46.96 39.77 22.2 

Uttar Pradesh 60.69 56.23 49.82 35.39 30.6 

West Bengal 34.67 38.2 32.32 22.41 14.8 

All India 49.01 45.24 40.79 32.36 25.7 

Source (Basic Data): Government of India, Press Information Bureau. * Data for Bihar, Madhya Pradesh 

and Uttar Pradesh exclude data for Jharkhand, Chhattisgarh and Uttarkhand respectively. 

Considering rural and urban poverty together, Tamil Nadu has one of the most 

successful records of reducing poverty. As shown in Table 1.5, its poverty head count 

ratio has fallen from about 35 percent in 1993-94 to 22.5 percent in 2004-05. Although 

Tamil Nadu’s HCR was almost the same as the all-India HCR in 1993-94, its HCR in 2004- 

05 was 5 percentage points lower than the all-India figure. Tamil Nadu was one of the 

few states in the country, where the urban poverty ratio was higher than the rural 

poverty ratio in 1993-94. However, Tamil Nadu was successful in reducing urban poverty 

6

and the urban poverty ratio was slightly lower than rural ratio (and all-India urban ratio) 

in 2004-05. 

Table 1.5 gives a comparative picture for the combined rural and urban poverty 

HCR. In 2004-05 for Tamil Nadu the combined poverty ratio is nearly 5 percentage points 

less than the all-India figure of 27.5. However, several states have lower poverty HCR 

including Andhra Pradesh at 15.8 percent, Gujarat at 16.8 percent, Haryana at 14.0 

percent, Kerala at 15 percent, and Punjab at 8.4 percent. Karnataka continues to have an 

incidence of poverty higher than that of Tami Nadu among the southern states. 

Table 1.5: Head Count Ratio: Combined: Selected States 

(Percent) 

States 1973-74 1977-78 1983 1993-94 2004-05 


Bihar 61.91 51.55 62.22 54.96 41.4 

Gujarat 48.15 41.23 32.79 24.21 16.8 

Haryana 35.36 29.55 21.37 25.05 14.0 

Karnataka 54.47 48.78 36.24 33.16 25.0 

Kerala 59.79 52.22 40.42 25.43 15.0 


Maharashtra 53.24 55.82 43.44 36.86 30.7 

Orissa 66.18 70.07 65.29 48.56 46.4 

Punjab 28.15 19.27 16.16 11.77 8.4 

Rajasthan 46.14 37.42 34.46 27.41 22.1 

Tamil Nadu 54.94 54.79 51.66 35.03 22.5 

Uttar Pradesh 57.07 49.05 47.07 40.85 32.8 

West Bengal 63.43 60.52 54.85 35.66 24.7 

All India 54.88 51.32 44.48 35.97 27.5 

Source (Basic Data): Government of India, Press Information Bureau. 

Table 1.6 summarises the improvement in the poverty profile in Tamil Nadu over 

time. Apart from the HCR, it also gives the number of poor persons in the rural, urban 

and combined categories since from 1973-74. During the period 1973-74 to 2004-05, the 

number of total poor declined from 2.4 crore to nearly 1.46 crore. However, all of this 

reduction in the number of poor cames from rural areas. The number of urban poor 

actually increased over time in absolute terms reaching a peak of 80.4 lakh in 1993-94. 

After 1993-94, there was a reduction in the number of urban poor but even in 2004-05 

the absolute number of urban poor was larger than that in 1973-74. There is discernable 

pattern of increasing urbanisation of poverty in Tamil Nadu, measured by the number of 

7

urban poor to total poor. This percentage increased from nearly 30 in 1973-74 to 47.5 in 

2004-05. This was largely due to migration of poor from rural to urban areas. 

Table 1.6: Poverty in Tamil Nadu: Improvement Over Time 

Rural Urban Combined % of 

Years 

No. of 

Persons 

% of 

Persons 

No. of 

Persons 

% of 

Persons 

No. of 

Persons 

% of 

Persons 

Urban 

Poor to 

(Lakh) 

(Lakh) 

(Lakh) 

Total 

1973-74 172.60 57.43 66.92 49.40 239.52 54.94 27.94 

1977-78 182.50 57.88 72.97 46.69 255.47 54.79 28.56 

1983 181.61 53.99 78.46 46.96 260.07 51.66 30.17 

1987-88 161.80 45.80 69.27 38.64 231.07 43.39 29.98 

1993-94 121.70 32.48 80.40 33.77 202.10 35.03 39.78 

2004-05 76.50 22.80 69.13 22.20 145.62 22.50 47.47 

Source (Basic Data): Government of India, Press Information Bureau. 

c. Poverty Gap Ratio 

Chart 1.1 indicates the progress in reducing the head count ratio in Tamil Nadu for rural, 

urban and combined. It will be noted that the urban poverty head count ratio exceeded 

that of the rural poverty HCR during the nineties and even in 2004-05 it is marginally 

higher than the rural poverty HCR. 

Chart 1.1: Head Count Ratio in Tamil Nadu for Rural, Urban and Combined 

70 

60 

50 

40 

30 

20 

10 

0 

1973-74 1977-78 1983 1987-88 1993-94 2004-05 

HCR (Rural) HCR (Urban) HCR (Combined) 

Chart 1.2 indicates the percent of urban poor in the total poor in Tami Nadu. The 

sharp change in the slope is clearly discernable in 1987-88 after which the urban poor in 

8

the total poor accounted for a progressively increasing share so that by 2004-05 the 

urban poor are nearly half of the total poor. 

Chart 1.2: Urban Poor in the Total Poor in Tami Nadu 

50.00 

45.00 

40.00 

35.00 

30.00 

25.00 

20.00 

15.00 

10.00 

5.00 

0.00 

1973-74 1977-78 1983 1987-88 1993-94 2004-05 

Urban Poor/Total Poor in % 

As the poverty ratio does not make any distinction within the broad category of the poor 

on the basis of their actual levels of consumption and deprivation, the Poverty Gap Index 

(PGI) is widely used to capture the depth and severity of poverty. The PGI measures the 

total shortfall of consumption below the poverty line, per capita of the total population 

(Appendix Table 1.3 gives the details). 

Thus, it measures the magnitude of the effort that would be required to raise the 

consumption level of all the persons below the poverty line to the consumption level of 

the poverty line. During 1987-88 to 1993-94 the PG Index for rural India (adjusted 

estimates) declined from 9.2 percent to 7.0 percent (2.2 percentage points decline) and 

the index for Tamil Nadu from 13.7 to 9.1 percent (4.6 percentage points decline). The 

PG Index for urban India also declined from 4.8 percent to 3.7 (i.e., 1.1 percentage 

points decline) percent while PG index for urban Tamil Nadu declined from 6.2 percent to 

4.5 percent. In 1999-00, there was a sharp decline of PG index for rural Tamil Nadu (4.5 

percentage points decline). The urban Index also declined by 2.5 percentage points. In 

1999-00, both urban and rural indices for Tamil Nadu were lower than that for the nation 

(Appendix Table 1.3). Thus, the depth and severity of poverty has declined as fast as 

incidence of poverty. 

9

d. Poverty and Calorie Intake in India 

Meenakshi and Vishvanathan (2003) have contended that in spite of the fact that income 

poverty has declined over the 1980s and 1990s, calorie intakes have declined. As such 

calorie deprivation has increased during 1983 and 1999-00. However, the depth and 

severity of nutrient deprivation and incidence of abject calorie deprivation has declined 

during this period. For rural areas the decline was on average 70 calories per capita over 

1983 to 1999-00. This decrease has occurred in all states. This has implied that the head 

count ratios based on calorie thresholds have increased between 1983 and 1999-00 for 

rural households. Table 1.7 and Appendix Table 1.4 show of the head count ratio in term 

of percent consuming below 2400 calories per day. These head count ratios are 

compared to the HCR derived by using the official poverty line. 

Table 1.7: Some Summary Statistics on Calorie Intake and Poverty 

Average Calorie Median Calorie Head Count Ratios Head Count Ratios 

Intake Per Capita Intake Per Capita (Percent Consuming of Poverty (Percent 

Per Day (Kcal) Per Day (Kcal) Below 2400 Calories with Below OPL 

States 

Per Day) 

Incomes) 

1983 1999-00 1983 1999-00 1983 1999-00 1983 1999-00 

Andhra 

Pradesh 

2204 2021 1988 1955 68.5 80.7 35.8 11.1 

Karnataka 2260 2028 2097 1905 64.0 78.9 40.0 17.4 

Kerala 1884 1982 1749 1904 81.5 81.2 48.5 9.4 

Tamil Nadu 1861 1826 1720 1727 80.6 86.5 59.1 20.6 

Source: Meenakshi and Vishvanathan (2003). 

Table 1.8 and Appendix Table 1.5 show the head count ratios for 1983 and 1999- 

00 for alternative calorie norms. 

Table 1.8: Head Count Ratios of Calorie Deprivation, Alternative Norms 

2200 Norm 1800 Norm 2700 (Per 

States 

Consumer Unit 

Norm) 

1983 1999-00 1983 1999-00 1983 1999-00 

Andhra Pradesh 56.9 69.7 30.0 36.9 53.8 68.1 

Karnataka 55.2 69.9 35.7 41.8 53.2 68.6 

Kerala 74.0 70.3 53.2 42.8 72.3 67.2 

Tamil Nadu 74.6 78.7 54.4 55.4 72.7 77.7 


e. Human Poverty Index 

The above poverty measures are rooted in calorie consumption and do not take note of 

the levels of consumption of protein, minerals and vitamins essential for the mental and 

10

physical development of people. More importantly, these say nothing about critical 

factors that shape living standards such as longevity, access to health services, nutritional 

status, educational status and access to safe drinking water and sanitation. The UNDP 

has formulated a composite index called the Human Poverty Index (HPI) containing four 

indicators: (i) proportion of population not expected to survive beyond 40 years, (ii) adult 

illiteracy rate, (iii) percentage of population without sustainable access to an improved 

water source, and (iv) percentage of children aged 5 or below who are underweight for 

their age. Annexure 1.4 summarizes the methodological details of measuring the HPI. 

The Planning Commission (2002) has provided the HPI values for major states 

using the following indicators that reflect the Indian conditions: (i) proportion of 

population not expected to survive beyond 40 years; (ii) a composite indicator on 

educational deprivation made up of (a) proportion of illiterate persons among those aged 

7 and above, and (b) proportion of children in the age group (6-18 years) not enrolled in 

school; (iii) a composite indicator on economic deprivation made up of (a) proportion of 

population below the poverty line, (b) proportion of population not getting medical 

attention at birth {or proportion of children in the age group (12-23 months) not fully 

vaccinated}, (c) proportion of population living in kutcha houses, and (d) proportion of 

population not having access to basic amenities, including access to safe drinking water, 

sanitation and electricity. Table 1.9 shows the HPI for the year 1981 and a comparable 

Index for 1991. 

Table 1.9: Human Poverty Index 

HPI 1981 

States 

Rural Urban Combined 

Value Rank Value Rank Value Rank 

Andhra Pradesh 56.2 23 30.0 24.0 50.1 20 

Karnataka 50.1 15 27.4 21.0 34.0 15 

Kerala 34.2 6 22.8 9.0 32.1 6 

Tamil Nadu 49.2 14 25.3 15.0 42.1 14 

All India 53.3 27.2 47.3 

HPI 1991: Comparable with 1981 

Andhra Pradesh 45.0 19 24.8 26.0 39.8 19 

Karnataka 37.5 15 20.7 20.0 32.7 15 

Kerala 21.8 2 14.4 4.0 19.9 4 

Tamil Nadu 34.0 13 18.7 16.0 29.3 12 

All India 44.8 22.0 39.4 

Source: Human Development Report, Planning Commission (2002). 

11

The state wise HPI values provided by UNDP (2007) for 1990 and 2000 are 

shown in Table 1.10. Strictly speaking, values in Table 1.9 and in Table 1.10 are not 

comparable. 

Table 1.10: State Wise Human Poverty Index 

States 1990 2000 States 1990 2000 

Andhra Pradesh 43.56 30.49 Maharashtra 35.99 27.57 

Assam 46.82 39.55 Orissa 48.17 41.43 

Bihar 57.46 46.40 Punjab 37.08 25.18 

Gujarat 34.67 28.34 Rajasthan 49.57 37.79 

Haryana 37.60 30.06 Tamil Nadu 33.07 22.91 

Karnataka 39.27 29.04 Uttar Pradesh 52.17 42.17 

Kerala 19.56 11.77 West Bengal 41.30 32.44 

Madhya Pradesh 49.68 39.21 India 43.65 33.63 

Source: UNDP (2007). 

However, they provide a rough idea about how the HPI for Tamil Nadu has 

declined over the years. The HPI for Tamil Nadu was 42.1 in 1981 and declined to 29.3 in 

1991 and then to 22.9 in 2000. It is noted that the HPI for Tamil Nadu was significantly 

low as compared to All India figure in all years. 

The Millennium Development Goal calls for a halving poverty between 1990 and 

2015, implying thereby bringing down the HCR of Tamil Nadu (India) from 39.5 (38.7) 

percent in 1990 to 19.8 (19.4) percent in 2015. Tamil Nadu is well on track to cut poverty 

in half by 2015. In fact it seems to achieve the target level in 2007-08 (Table 1.11 and 

Appendix Table 1.6). But the country will achieve its target by 2018-19. Tamil Nadu has 

already achieved its MDG target level in urban areas in the year 2003-04 (while our 

projection indicates that the nation would achieve the target level only in 2023-24). Tamil 

Nadu, however, will attain its target level in rural areas by 2013-14. The HPI index 

measure also indicates that the state is on track to the meet the MDG on poverty 

reduction. 

A recent study by Chen and Ravallion (2008), has argued that revisions in the 

poverty lines based on PPP measures resulting from the 2005 ICP (International 

Comparison Program) price data indicates that that the incidence of poverty in the world 

is higher than what the past estimates have suggested. The main reason is that the past 

PPPs had implicitly underestimated the cost of living in most developing countries. Their 

correction for the bias in past PPPs has added 400 million people to the global count for 

2005, when judged against an international poverty line that is representative of the 

national poverty lines found in the poorest countries. 

12

Table 1.11: Millennium Development Goals: Position and Progress 

in Tamil Nadu 

Details Value in 

1990 

MDG Target 

Value in 

2015 

Average 

Annual 

Growth 

Rate 

Projected 

Value in 

2015 

Status 

Projected 

Year of 

Achieving 

Target 

Poverty 39.53 19.76 -0.0394 14.45 On-track 2007.2 

Ratio* 

Rural 

35.77 17.89 -0.0317 16.00 On-track 2011.5 

Poverty* 

Urban 

46.62 23.31 -0.0516 12.39 On-track 2003.1 

Poverty* 

Malnutrition: % of Underweight Children 0-3 Years** 

Rural 60.26 30.13 -0.0534 15.30 On-track 2002.6 

Urban 36.32 18.16 -0.0093 28.74 Off-track 2063.9 

% of Children (0-5 Years) 

Undernourished# 

Tamil Nadu 48.44 24.22 -0.0214 28.18 Off-track 2022.0 

Literacy Rate (%) : Person @ 

Tamil Nadu 61.67 0.0161 91.90 N.A 

Literacy Rate (%) : Female @ 

Tamil Nadu 50.15 0.023 88.54 N.A 

Gross Enrolment at Primary$ 

Tamil Nadu 135.03 -0.0080 110.48 N.A 

Ratio of Girls to Boys in Primary$ 

Tamil Nadu 0.86 1.00 0.0056 0.98 Off-track 2018.1 

Drop out Rate at Primary Level# 

Tamil Nadu 19.69 0.00 -0.0198 11.96 Off-track 

Drop out Rate at Middle School# 

Tamil Nadu 42.40 0.00 -0.0171 27.50 Off-track 

Source: NFHS – 1 (1992-93), NFHS – 2 (1998-99), NFHS – 3 (2005-06), Census of India (2001) and Economic 

Survey (various issues) and Selected Educational Statistics, 2006-07. 

Note: * Using figures for 1993-94 (V 1 ) and 2004-05 (V 2 ), the annual compound growth rate, r was computed 

by the formula: r = (V 2 / V 1 - 1). Using r as the discounting rate, the value in 1990 (V 0 ) is obtained and 

the half of this 1990 value is considered as the target value (V 3 ). Projected value in 2015 (V 4 ) is 

obtained by the compounding formula: V 4 = 1990*(1+r) 25 . Projected year of attainment of the target 

(n) is computed by: n = Ln (V 3 /V 0 ) / Ln (1+r). ** 1992-93 and 1998-99 figures are used. # 

1991-92 and 2000-01 values are used. @ 1991 and 2001 figures are used. $ 1990-91 and 2006-07 

data are used. 

While the new data suggest that the developing world is poorer than thought 

earlier, it has been no less successful in reducing the incidence of absolute poverty since 

the early 1980s. The overall rate of progress against poverty is fairly similar to past 

estimates. The authors agree that the developing world as a whole is clearly still on track 

13

to attaining the first Millennium Development Goal of halving the 1990s “extreme 

poverty” rate by 2015. However, they assess that the developing world outside China will 

not attain the MDG without a higher rate of poverty reduction than has been seen over 

1981-2005. Two features in global poverty reduction are particularly notable: (i) there is 

a marked “bunching up” in the global distribution of consumption just above our 

international poverty line, and (ii) the poor are highly vulnerable to the steep rise in 

international food and fuel prices since 2005. The main lessons for India and its states 

are also that most people who migrated to the category of the non-poor are bunched just 

above the poverty line and that they may be highly vulnerable to rising food and fuel 

prices. 

1.4 Current Status of Millennium Development Goals: Tamil Nadu 

In examining the initial conditions regarding MDGs, it is relevant to take note of the 

advice given by Jan Vandemoortele (2007) that ‘Global targets must be tailored to make 

them context-sensitive ’. In this section we look at the status and targets of MDGsrelated 

to hunger poverty, education, gender equality, and health in Tamil Nadu. 

Tamil Nadu seems to be well on its way to achieving the poverty related MDGs 

for the state as a whole. 

a. Hunger Poverty 

The proportion of malnourished children (aged 0-5 years) was remarkably high - 48.4 

percent in Tamil Nadu in 1990 as compared to 56.9 percent for all India, and this 

decreased to 39 percent in 2000-01 which puts the state off-track in halving the 

proportion of children suffering from hunger by 2015 (Table 1.11). 4 However, achieving 

this goal would still leave roughly one quarter of Tamil Nadu’s children malnourished. 

Even the decline in the proportion of malnourished children since 1990 has not led to any 

substantial decrease in the absolute number of children in this category, due to 

population growth. 

More than half of the rural children (0-3 years) in Tamil Nadu (60.3 percent as 

against the All India figure of 57.3 percent) in 1990 were underweight. The MDG calls 

for reducing the proportion of underweight children to 30.1 by 2015. The projection 

4 Child malnutrition can result from a number of causes. A late start in breastfeeding, and/or early termination of 

breastfeeding increases the risk of infection in infants, leading to malnutrition. Supplementary but inadequate feeding 

after weaning, illness, infections, and low maternal and birth weight can also lead to child malnourishment. 

14

indicates that Tamil Nadu will achieve the target level well in advance (i.e. in 2003) 

[Appendix Table 1.6]. 

The Tamil Nadu Integrated Nutrition Program (TINP), started in 1980 by the 

State Government seems to be a successful program. This program uses growth 

monitoring to target the neediest children and follows their progress. Children in the 

scheme are given supplementary nutrition. Health services that include check-ups, 

treatment of diarrhea, de-worming and immunization are also provided to the needy 

children and to the expectant and lactating mothers. This program relies extensively on 

local nutrition workers who work with women’s and girls’ groups to promote strategies 

for awareness and change such as birth weight recording followed by monthly weighting 

of children and feeding practices. Thus, it also helps to empower local women through 

increased awareness to take better care of personal and household health, nutrition and 

hygienic issues. 

The Integrated Child Development Services Programme (ICDS) is also successful 

in Tamil Nadu. This programme, the main outlet for public spending on child nutrition, 

operates through centers in villages called anganvadi, where local workers are provide 

services mush the same as described above. Children and mothers in Tamil Nadu also 

benefit from the midday meal scheme which has improved the nutrition status of children 

as well as pregnant mothers. National Rural Employment Scheme implemented in 2004 

is also a positive step to reduce the poverty ratio further. 

However, the state was not successful in reducing the proportion of underweight 

children in urban areas. The rate of underweight children in urban Tamil Nadu declined 

marginally from 35.7 in 1992-93 to 33.7 in 1998-99 which puts the state off track to 

halving the proportion of children suffering from weight (hunger) by 2015. Recently the 

state government has started providing three eggs and 20 grams of Black Bengal 

gram/Green gram and 20 grams of Potatoes per week through midday meal scheme. 

This would help to improve further the nutrition status of children in Tamil Nadu. 

According to National Family Health Survey (NFHS), proportion of adult women 

(15-49 years) in Tamil Nadu (India) whose body mass index is below normal was 29 

(36.2) percent in 1998-99 and this rate declined to 23.5 (33) percent in 2005-06. The 

proportion of men in Tamil Nadu (India) whose body mass index is below normal was 

18.5 (28.1) percent in 2005-06. 

15

. MDGs and Education Status in Tamil Nadu 

During 1991 to 2001 the literacy rate of Tamil Nadu increased significantly from 62.7 to 

73.5 percent (10.8 percentage points increase) and the all India literacy increased from 

52.2 to 64.8 percent (12.6 percentage points rise) 5 [Appendix Table 1.7]. If the same 

trend continues, the literacy in Tamil Nadu and all India will probably reach 91.9 percent 

and 87.7 percent respectively in 2015 (Table 1.11 and Appendix Table 1.6). 

In 2001, the female literacy of the state was only 63.4 percent and the all-India 

rate was 53.7 percent. The projections imply that the former would reach 88.5 percent 

and the latter 83.1 percent in 2015. It is heartening to note that the literacy rate of 15-24 

year olds in Tamil Nadu was 88.4 percent in 2001 (all-India rate was 76.4 percent) and 

that this surpassed the overall literacy rate. However, the female literacy in this age 

group was only 84.2 percent as against the national figure of 67.7 percent (Table 1.12). 

The MDG in this area calls for ensuring that all boys and girls will complete a full 

course of primary schooling. This means that the dropout rate at primary level should be 

zero by 2015. Between 1991-92 and 2006-07 the dropout rate at primary level declined 

from 19.3 to 8.02 percent. 6 During 1991-92 to 2001-02, the rate at middle school level 

decreased from 41.7 to 35.1 percent. Thus dropout rates are still very high. Our 

projections indicate that the dropout rate at primary level and middle level will reduce to 

4.7 percent and 27.5 percent respectively by 2015. These figures put the state off-track 

to meet the MDG. 

Table 1.12: Selective Education Indicators 

Indicators Years India Tamil Nadu 

Literacy Rate of 15-24 Year-olds (%): 1991 61.9 

Total $ 

2001 76.4 88.4 

Literacy Rate of 15-24 Year-olds (%): 1991 49.3 

Female $ 

2001 67.7 84.2 

1991-92 42.6 19.3 

School Drop Outs at Primary Level *^ 2006-07 25.06 8.02 

School Drop Outs at Middle Level * 1991-92 60.91 41.67 

2001-02 57.3 35.07 

Gross Enrolment at Primary * 1990-91 100.1 134.00 

2006-07 111.4 117.81 

Source: $ Calculated using Census Data; * Economic Survey of India (various issues); ^ Selcted Educational 

Statistics, 2006-07. 

5 The UMI reference level is 95 percent. 

6 The all-India figure decreased from 42.6 percent to 25.06 percent. 

16

However, there is a scope for meeting the goal. The Indian Government has 

launched the National Program of Universal Education known as Sarva Shiksha Abhiyan 

(SSA). The SSA sets out to have all children completing five years of schooling by 2007, 

to have all children completing eight years of schooling by 2010, to eliminate gender and 

social disparities in primary schooling by 2007 and by 2010 in secondary schooling and to 

have universal retention of children in primary school by 2010. The 11 th Plan approach 

paper (2007-12) sets out to increase literacy rate to 85 percent and to lower gender gap 

in literacy to 10 percentage points. While it is extremely promising that the government 

itself has laid out these goals that go beyond the MDGs within a shorter time frame, it 

remains to be seen whether any of these will be met. 

c. Millennium Development Goals and Gender Equality in Tamil Nadu 

The state is well on track in terms of improving the proportion of girls to boys in primary 

education. The ratio increased from 0.86 in 1990-91 to 0.94 in 2006-07. The 

corresponding national figures are 0.71 and 0.88 (Table 1.13). It is estimated that if 

improvements continue at their current rate the ratio of girls to boys in primary school 

will reach the required level in 2018 in Tamil Nadu (in 2016 for all-India). It is noted that 

the ratio at middle level in Tamil Nadu was 0.93 in 2006-07 (as against the national 

figure of 0.82). As stated earlier, Tamil Nadu has been successful in using mid-day meals 

scheme for school children to enhance rates of enrolment and retention overtime. 

Table 1.13: Gender Equality Indicators 


Gross Enrolment at Primary: Girls/boys * 1990-91 0.71 0.86 

2006-07 0.88 0.94 

Gross Enrolment at Middle: Girls/boys * 1990-91 0.58 

2006-07 0.82 0.93 

Proportion of Women Lok Sabha (percent) $ 1999 9.00 3.00 

2004 8.00 3.00 

Proportion of Women in Labor Market 

1991 22.50 30.40 

(percent) # 

2001 23.30 31.40 

Women in Labor Market (Non-agriculture 1991 13.53 18.95 

Sector) # 

2001 17.21 23.42 

Source: # Census of India (2001); * Economic Survey (various issues) and Selected Educational Statistics, 

2006-07; and $ Election Commission of India. 

The participation of female workers in the total work force is summarised in 

Table 1.14. It is shown that the share of female work force to total work force has gone 

17

down by a small margin considering all the sectors together. This is primarily due to the 

fall in their participation in the secondary sector. In the primary sector the share of 

female work force in the total work force as remained almost the same and in the tertiary 

sector the female participation rate has increased. 

Table 1.14: Gender Composition of Work Force 

Details 1993-94 1999-00 2004-05 

Female Work Force (in Lakh) 

Primary 75.28 67.40 61.86 

Secondary 21.27 22.03 27.80 

Tertiary 15.34 17.97 24.46 

Total 111.89 107.40 114.12 

Total Work Force (in Lakh) 

Primary 154.81 145.61 127.42 

Secondary 62.43 68.53 84.87 

Tertiary 68.36 75.56 94.37 

Total 285.60 289.70 306.66 

Share of Female in Total Work Force (in Percent) 

Primary 48.63 46.29 48.55 

Secondary 34.07 32.15 32.76 

Tertiary 22.44 23.78 25.92 

Total 39.18 37.07 37.21 

Source: Government of Tamil Nadu (2008), Eleventh Five Year Plan 2007-08. 

Gender-related Development Index (GDI) or Gender Equality Index (GEI) that is 

estimated as a proportion of economic, educational and health attainments of females to 

that of males for Tamil Nadu, indicates that the status of women had considerably 

improved between early eighties and early nineties ( Appendix Table 1.7 ). Among the 

15 major states, Tamil Nadu ranks second next only after Kerala in GEI. This summary 

measure also indicates that the gender bias in Tamil Nadu state is very low as compared 

to all-India. 

It has been noted in the literature that India has one of the highest proportions 

of malnourished women in developed countries (see for example, Jose and 

Navaneetham, 2008). Women’s malnourished also increases the risk maternal mortality 

apart from being essential for a person’s wellbeing and human development. Based on 

national family health survey data (NFHS-3, 2005-06), Jose and Navaneetham provide an 

inter-state perspective on women’s malnutrition. They look at body mass index (BMI), 

chronic energy deficiency (CED) and incidence of anemia (iron deficiency) to indicate the 

18

status of malnutrition. The accepted norms for these indicators are as follows. BMI of less 

than 18.5 is referred to chronic energy deficiency. BMI above 25.0 and 30.0 refer to over 

weight and obesity, which are also indicative of poor nutrition. Iron deficiency anemia is 

indicated by 11.9 grams/deciliter of haemoglobin in the blood. Haemoglobin below 9.0 

and 7.0 grams/deciliter denotes moderate and server anemia. 

Table 1.15 shows the status of Tamil Nadu women with regard to malnutrition as 

compared to other selected states and all-India figures. It is indicated that about 28.4 

percent of women suffer from chronic energy deficiency in Tamil Nadu. This is higher 

than Kerala and Punjab but still below most other states and all-India figure. In Tamil 

Nadu more women are over weight or obese (20.9 percent) as compared to all-India 

figure of 12.6 percent. Percent of women suffering from anemia in Tamil Nadu is 53.2, 

which is quite high compared to Kerala and Punjab and is close to the all-India figure. 

Thus, while Tamil Nadu’s position is relatively better compared to the all-India figures in 

terms of basic norms, still considerable ground had to be covered. 

Table 1.15: Women’s Malnutrition across Major States in India: 2005-06 

(Percent) 

States 

CED 

BMI Anemia CED and Anemia 

Overweight or Moderate or Any Both Either Neither 

Obese Severe 

Kerala 18.0 28.1 7.1 32.8 7.6 35.5 56.9 

Tamil Nadu 28.4 20.9 15.8 53.2 16.7 47.9 35.3 

Andhra Pradesh 33.5 15.6 23.9 62.9 22.5 51.3 26.2 

Karnataka 35.5 15.3 17.1 51.5 19.8 46.9 33.3 

India 35.6 12.6 16.8 55.3 21.6 47.5 30.9 

Source: Jose and Navaneetham (2008). 

Notes: Computed using NFHS-3 data; CED: Chronic energy deficiency and BMI: Body mass index 

Details about selected other states and a related table on malnutrition among 

Ever-Married Women are given as Appendix Tables 1.8 and 1.9. 

d. Millennium Development Goals and Health Status Indicators in Tamil Nadu 

Goals four to six relate to health. Specifically, Goal 4 relates to reducing child mortality; 

Goal 5 focuses on improving maternal health and Goal 6 relates to halting growth of 

HIV/AIDS, malaria and other diseases. 

19

(i) Child and Infant Mortality 

It is estimated that nearly 26 million infant are born each year in India, of whom 1.2 

million die before completion of first four weeks of life. About 1.7 million children die 

before reaching their first birth day in India, representing a tremendous waste of human 

potential and a pressing need to meet the MDG to reduce child and infant mortality by 

two-thirds by 2015. Between 1991 and 2005, the all India infant mortality rate (IMR) 

decreased from 80 to 58 and the IMR of Tamil Nadu from 57 to 37 (Appendix Table 

1.11). If reduction of IMR continues at its current rate, India and Tamil Nadu are not 

likely to meet this goal. The IMR will reach the level of 27.2 in 2015 in Tamil Nadu as 

against the target rate of 19.6. Tamil Nadu’s rural IMR was 70.4 in 1990. Our projection 

indicates that the rural IMR will likely to be 31.7 in 2015 as against the target level of 

23.5 in Tamil Nadu (Table 1.16). 

Details 

Table 1.16: Health Related Medium Development Goals 

Value in 

1990 

MDG Target 

Value in 2015 

Average 

Annual 

Growth Rate 

Projected 

Value in 

2015 

Status 

Projected 

Year of 

Achieving 

Target 

IMR 


Rural IMR 


Under 5 Mortality Rate 

Tamil Nadu 95.99 31.9 -0.0507 26.1 On-track 2011 

Children (12-23 months) received Measles Vaccine (%) 

Tamil Nadu 68.7 100 0.0199 100 On-track 2009 

% Births attended by Skilled Health personal 


Institutional Births 

Tamil Nadu 61 100 0.0266 117.5 On-track 2008 

% Currently Married Women (15-49) use Contraceptive 

Tamil Nadu 47.55 100 0.0172 72.81 Off-track 2033 

% Household access Safe Drinking Water (Total) 

Tamil Nadu 65.8 82.9 0.0242 119.6 On-track 2000 

% Household access Safe Drinking Water (Rural) 


% Households with Toilet/Latrine Facility 

Tamil Nadu 27.98 63.9 0.025 51.9 Off-track 2023 

Source (Basic Data): Tamil Nadu Economic Appraisal and National Health Survey. 

20

The under-five mortality rate-U5MR (per 1000 live births) in Tamil Nadu was 96 

in 1990 (as against the national figure of 115) and declined to 63 in 1998-99. The state is 

well on track to reduce the U5MR by two thirds by 2015. The prediction shows that the 

state will meet the target well in advance (i.e., by 2011). It is noted that the infanthood 

death constitutes about two-thirds of under-five mortalities. More policy attention is 

required to reduce infant death. 

Low birth weight and under nutrition are the major risk factors of infant and child 

mortality. According to National Family Health Survey-3 (2005-06), the proportion of 

children (0-3 years) who are underweight is 33 percent in Tamil Nadu and 46 percent in 

the country. About 73 percent (80 percent) of children (6 – 35 months) are anemic in 

Tamil Nadu (India) [Appendix Table 1.11). 

The Ministry of Health and Family welfare is implementing several programmes 

and schemes to address the issues of high infant and child mortality. Some of the major 

child health intervention includes Universal Immunization Programme, where 

immunization is carried out against six vaccine preventable diseases, control of deaths 

due to acute respiratory infections and diarrhea diseases and provision of essential new 

born care to address the issue of neonates. These schemes would help all states 

including Tamil Nadu to improve child immunization, thereby reducing infant deaths. 

According to the National Family Health Survey (NFHS) reports, the proportion of 

children 12-23 months fully immunized (BCG, measles, and 3 doses each of polio/DPT) in 

Tamil Nadu (India) increased from 65.1 (35.5) percent in 1992-93 to 80.8 (43.5) percent 

in 2005-06 (Appendix Table 1.11). This means that 20 percent children in Tamil Nadu 

are not fully immunized. However, the proportion of children 12-23 months received at 

least measles increased to 92.4 per cent in 2005-06 (See Appendix Table 1.10). The 

projections indicate that the state will attain the required 100 percent level in 2009 while 

the country in 2025 (Appendix Table 1.6). 

(ii) Maternal Mortality 

Ensuring safe motherhood is one of the biggest challenges in India. Maternal mortality 

rates (MMR) are extremely high with 407 deaths per 1 lakh births in 1998. The MDG 

goal calls for a reducing MMR between 1990 and 2015, by three-quarters, implying 

thereby bringing down the MMR of the country to 109 in 2015. The pace of decline of 

MMR has been slow and it seems very unlikely that India will meet this MDG if progress 

continues at its current rate (Bajpai, Sachs and Volvks, 2005). Tamil Nadu compares well 

21

in terms of MMR (1998) with 79 deaths per 1 lakh births. It seems that the state is well 

on track to reduce the MMR to the required level in 2015. 

The most common causes of maternal deaths are hemorrhage, anemia, 

puerperal sepsis, obstructed labour, abortion, hypertensive disease of pregnancy, 

anemia, bad obstetric history and lack of antenatal care. According to NFHS-3, the 

proportion of women (15-49 years) who are anemic was 53.3 percent in Tamil Nadu and 

56.2 percent in India in 2005-06 (Appendix Table 1.12). Another important indicator of 

maternal care is the number of deliveries conducted by skilled personnel. In 2005-06, 

skilled attendants conducted only 48 percent of deliveries in India. This not only 

increases the mortality rates of infants and children but also contributes to high maternal 

mortality in India. The corresponding figure for Tamil Nadu was 93 percent. The 

projection shows that 100 percent of women in the state will give birth under the care of 

a skilled birth attendant by 2010. 

In terms of place of delivery, in 2005-06, only 41 percent of births occurred in 

health institution in India. In the same year, more than 90 percent of births in Tamil 

Nadu occurred in health institutions. It seems that almost all births in Tamil Nadu will 

occur in medical institution in 2008 (Appendix Table 1.6). 

The Government of India has introduced the Janani Suraksha Yojana (a 

modification of the National Maternity Benefit Scheme), which provides comprehensive 

medical care during pregnancy, child birth and post natal care and thereby endeavor to 

improve the level of institutional deliveries and reduce maternal mortality rate. It is 

interesting to note that 96.5 percent of pregnant women received at least 3 antenatal 

care check-up in Tamil Nadu in 2005-06. The corresponding figure for the country was 

only 50.7 (NFHS-3, 2005-06). 

(iii) Life Expectancy 

The male (female) life expectancy was 62.3 (64.4) years in 1991-95 in Tamil Nadu. The 

male expectancy increased to 67 years and female expectancy to 69.8 in 2001-06. In 

2001-06, the all India life expectancy values of male and female were 63.9 and 66.9 

years. In that period, Tamil Nadu ranked third in term of life expectancy values 

(Appendix Table 1.11). 

22

(iv) HIV/AIDS, Malaria and Other Diseases 

AIDS is not only a severe public health problem but also a major development issue on 

account of its potential impact on productivity and economic growth. As on 31 st August 

2006, the number of AIDS cases reported to National AIDS Control Organization (India) 

was 1.25 lakh. Of these, 41.6 percent cases reported from Tamil Nadu. The state AIDS 

project cell formed in 1991 was reconstituted as Tamil Nadu AIDS Control Society 

(TNSACS) to tackle the problem of AIDS in a more effective manner. The MDGs envisage 

that HIV/AIDS epidemic would be halted and the spread of disease would begin to 

reverse by 2015. Runaway spread of HIV/AIDS seems to have been already arrested in 

India (Agarwal, 2005). 

In 2006, of the 1.67 million malaria cases reported in the country, about 1.6 

percent of them reported in Tamil Nadu. The MDGs envisage that the incidence of 

malaria and other major diseases would be halted and the spread of disease would begin 

to reverse by 2015. Given that the incidence of malaria had significantly declined from 

80586 in 1996 to 27214 in 2006 due to intensive control measures like active and passive 

surveillance, and vector control measures, the state seems to meet the target well in 

advance (Appendix Table 1.10). 

India accounts for almost a quarter of Tuberculosis (TB) cases in the world. TB 

causes more deaths every year in India. The number of deaths due to TB increased from 

7096 in 1998 to 37639 in 2004. During the same period, the deaths in Tamil Nadu also 

increased from 285 to 3437. 

(v) Human Development Index 

Like HPI, the human development index is a composite (formulated by UNDP) containing 

indicators relating to three factors: life expectancy at birth, representing a long and 

healthy life, educational attainment (representing knowledge) and real per capita income 

in purchasing power parity dollars, representing a decent standard of living. 7 The 

Planning Commission (2002) has provided the HDI values for major states using the 

following indicators: life expectancy at age 1, IMR, literacy rate, intensity of formal 

education, and per capita consumption. It shows the distance the state has to travel to 

7 Adult literacy rate (two-thirds weight) and the combined gross primary, secondary and tertiary enrolment ratio (one-third 

weight) measure the educational attainment. The purchasing power parity dollar value is used to compare the per capita 

income of the nations. UNDP argues that if people have these three “choices”, they may be able to access other 

opportunities as well. 

23

each the maximum possible value. 8 During 1991 to 2001, Tamil Nadu’s HDI value 

increased from 0.466 to 0.531 and the all India HDI from 0.381 to 0.472. In 2001, Tamil 

Nadu ranked third among the major states in India (Appendix Table 1.7). 

(vi) Water and Sanitation 

Million of people in India suffer from waterborne diseases as a result of lack of access to 

safe drinking water. In 1991 the proportion of households with sustained access to safe 

drinking water was 67.4 percent in Tamil Nadu as against 62.3 percent in India 

(Appendix Table 1.10). The corresponding figures in rural areas were 64.3 percent and 

55.5 percent. Since 1991, the proportion of households with safe drinking water has been 

increasing in both rural and urban areas in Tamil Nadu and India. If the rate of 

improvement is sustained, the country as well as Tamil Nadu will meet the MDG target 

well in advance (Appendix Table 1.6). 

Diseases such as typhoid, cholera, dysentery and hepatitis are more likely to be 

contracted under poor sanitary conditions, which abound when human excreta is not 

properly disposed of. During 1992-93 to 1998-99, the proportion of households with 

toilet/latrine facility increased from 29.4 percent to 34.1 percent in Tamil Nadu (Appendix 

Table 1.10). Our projections indicate that state will fail to meet the MDG target and the 

country too. 

1. 5 Summary 

To summarise the trends in poverty reduction in Tamil Nadu over time and in comparison 

to other states the following points can be highlighted. 

1. Reduction in rural poverty in Tamil Nadu picked up after 1983. During the period 

1983 to 2004-05 rural poverty head count ratio in Tamil Nadu fell by nearly 30 

percentage points whereas the corresponding reduction in the all-India rural 

head count ratio was only 17 percentage points. 

2. Reduction in urban poverty in Tamil Nadu picked up sharply after 1993-94 but 

the fall in the head count ratio during 1993-94 to 2004-05 was much less in 

Tamil Nadu compared to the corresponding reduction in all-India poverty urban 

head count ratio. 

8 Although the computation procedure is the same, this index is not strictly comparable with the UNDP’s HDI. 

24

3. While Tami Nadu has done comparatively better than most other states in 

reducing the combined poverty, the overall head count ratio at 22.5 in 2004-05 

being nearly 5 percentage points below the all-India figure at 27.5. In 2004-05 

several states in India including two southern states viz., Andhra Pradesh and 

Kerala has a much lower overall poverty head count ratio. 

4. One noticeable pattern in the poverty reduction overtime is that in terms of 

absolute number of urban poor in Tamil Nadu are more in 2004-05 as compared 

to 1973-74. There is a discernable trend toward urbanisation of poverty, 

measured by the percentage urban poor to total poor which has increased over 

time. In 1973-74 nearly 30 percent of total poor in Tami Nadu were urban poor. 

In 2004-05 nearly 47.5 percent of total poor are urban poor in Tamil Nadu. 

In the context of the selected MDGs, some notable features are listed below. 

a. Tamil Nadu has one of the most successful records of reducing poverty in a 

state-wise comparison. The poverty head count ratio has fallen from about 55 

percent in 1973-74 to 21 percent by 1999-00 according to the Planning 

Commission data. This is more than 5 percentage points lower than the all-India 

head count ratio in 1999-00. Tamil Nadu is however one of the few states in 

India, where the urban poverty head count ratio is higher than the rural poverty 

ratio. There is also a spatial concentration of poverty in some of the low-income 

districts. 

b. Despite the progress achieved in reducing income poverty, hunger poverty / 

calorie deficiency remains a major problem in Tamil Nadu. 

c. The infant mortality rate was 15 in Tamil Nadu compared to 77 for all-India in 


d. The dropout rate in class 1-10 was 41.7 per cent for Tamil Nadu, compared to 

59.9 for All-India in 2006-07. 

e. In terms of the human development index (HDI), Tamil Nadu is ranked after 

Kerala, Goa and Maharashtra. Its rank in HDI is better than its rank in GSDP. 

f. In terms of gender disparities also, Tamil Nadu’s performance is comparatively 

better. The gender ratio was 98.6 in 2001 and the female literacy rate was 63.4. 

25

g. The incidence of HIV/Aids is disturbing with total number of reported cases more 



h. With growing urbanization, a major problem would be providing safe drinking 

water in urban areas with high density of population so that water-borne and 

related diseases could be kept at a minimum. 

Water scarcity and land degradation are two major constraints that affect 

agriculture in the state, which possibly impact the poor more than others. 

In the next Chapter we look at the growth and poverty reduction strategies 

prosposed by economists and the macro drivers that are specific to Tamil Nadu. 

26

Chapter 2 

REDUCING POVERTY: THE MACRO ECONOMIC DRIVERS 

Growth is a strong antidote to poverty just as inflation makes the poor vulnerable. 

Economic growth not only shifts people above the poverty line but also reduces the 

intensity of poverty by uplifting the mean income of the poor closer to the poverty line. 

The magnitudes of growth as well as its distributional dimensions are of importance in 

the context of poverty reduction. The poverty-reducing impact of growth, however, is 

context-specific. In particular, high levels of individual income and asset inequalities in a 

country or region can act as a hindrance in reducing poverty through growth. 

2.1 Growth and Poverty Reduction: Some Lessons from the Literature 

a. Redistribution and Poverty-reducing Effect of Growth 

Growth reduces poverty when it is supported by suitable policies and when certain 

preconditions are met. Srinivasan (2001) observes that policies and processes can be 

identified a priori, some of which would be expected to generate sustained growth and 

poverty reduction while others would not lead either to growth or poverty reduction. A 

rate of growth that seems to reduce poverty significantly in one country or region can 

have very little effect on the poor of another country or region. Some features of growth 

can even increase the incidence of poverty. Bardhan (1996) highlights the poverty 

reducing vis-à-vis poverty increasing features of growth, observing: 

“In situations of severe capital market imperfections, the escape routes from 

poverty for the unskilled and the assetless may remain blocked, while growth 

improves the prospects for capital-intensive or skill-intensive projects. The 

centripetal forces of growth with increasing returns may drain resources away 

from backward regions reinforcing regional polarisation, as economic 

geographers have repeatedly shown”. 

Growth accompanied by equity is generally effective in reducing poverty. There 

are a number of situations in which equity promotes efficiency, and lack of equity 

hampers it. For example, rampant poverty breeds crime and ‘extra-legal appropriative 

activities’ (Grossman, 1992) and political instability, which can have damaging 

consequences for investment and macro-economic efficiency. There is also a link 

between nutritional intake and work efficiency in situations of extreme poverty. A more 

egalitarian distribution of land by reducing malnourishment and improving employability 

27

of the currently unemployed, may lead to a rise in the aggregate output in the economy 

(Dasgupta and Ray, 1986). 

Redistribution policies can support economic growth by correcting market 

failures, especially imperfections of the credit and insurance markets that particularly 

affect the poor. Expanding access to credit, can make small farmers and artisans 

economically more viable by allowing them to enlarge their scale of production, or take 

up more high-return, high-risk occupations. Better education and health for the poor 

have important positive externalities for the rich. Better education for women is often 

associated with better health, nutrition, and health of children (particularly daughters). 

Similarly, better opportunities for outside work for young women can lead to socially 

more beneficial fertility behaviour through raising the marriage age. 

Markets and institutions of governance have a critical role in broad-based poverty 

reduction strategies. Changes in institutions for risk taking and sharing, such as the 

replacement of informal risk sharing arrangements among members of a small 

community (e.g., households in a village) by facilitating participation in well functioning 

markets, can affect the pattern of resource allocation, particularly, relating to the 

selection of crops, and use of fertilisers. Growth and its impact on poverty are also 

affected by the efficiency of the legal system particularly for enforcing rights and 

contracts. 

The asset base is critical in enhancing the poverty-reducing impact of growth. 

Rapid growth could be detrimental to poverty reduction if it erodes the asset base of the 

poor including common property resources to which they had free access. A shift in 

public expenditure away from the provision of subsidies on goods and services 

extensively used by the poor to sustain growth promoting investment in infrastructure 

may adversely affect poverty. Unsustainable growth brought about through inflationary 

financing could increase poverty. 

b. Sectoral Composition and Elasticity of Connection 

Sectoral composition of growth also significantly, affects poverty alleviation. In 

developing countries with highly unequal income and asset distribution, the poor may be 

substantially disadvantaged in the growth process. Much of the poverty-reducing impact 

of growth depends on the ‘elasticity of connection’ between the poor and the rest of the 

economy. Timmer (1997) has empirically examined the role of elasticity of connection 

using a cross-country framework. The `elasticity of connection' between the poor and the 

28

est of the economy indicates the extent to which the poor share in the overall GDP 

growth. In particular, it is defined as the degree to which a percentage increase in 

overall GDP translates into a percentage increase in the income of the poorest quintile. 

Timmer (1997) regresses the level of per capita GDP growth on the level of income for all 

five income quintiles simultaneously, using a fixed-effects framework. This model found 

that while the poor do participate in growth in many economies, the extent of their 

participation is much lower in more unequal countries. 

Timmer’s model also examines the sectoral composition of growth between 

agriculture and non-agriculture in countries that have a significant agriculture sector, are 

reasonably large, and are considered as developing countries. In estimating the elasticity 

of connection, Timmer regresses the level of income of each quintile on overall per capita 

GDP, by including country and time fixed effects (dummy variables for each country 

included and for each decade from the 1960’s to the 1990’s). The country fixed effects 

allow shifts in the regression intercept for each country, but assume the same slope or 

elasticity of connection for all countries. The fixed effects for decades allow a shift in the 

regression intercept for each 10-year period. 

Timmer finds that in unequal countries, there is a pronounced Kuznets effect: the 

elasticity of connection for the poorest quintile is significantly lower than that for the 

higher quintiles. The poor appear to be much more disconnected from the growth 

process in these economies. The elasticity of connection for the poorest quintile is 0.257 

for agriculture and 0.449 for non-agriculture. In contrast, for those economies with 

better income distribution, the elasticity of connection for the poor in the agriculture 

sector is 1.146 and 1.018 for non-agriculture. This is slightly higher than the elasticity 

values for the upper quintiles, suggesting a slight "anti-Kuznets" effect in these 

economies. 

These results indicate that two fundamentally different growth processes may be 

at work with respect to the role of labour productivity in agriculture and non-agriculture. 

In countries where the income gap is relatively small, labour productivity in agriculture is 

slightly but consistently more important in generating incomes in each of the five 

quintiles. Also, more agricultural productivity has a noticeable “anti-Kuznets” effect in 

these countries. A similar effect is seen for the non-agricultural sector and this impact is 

even more important for the poor because the non-agricultural sector is large (on 

average 75 percent of the overall economy). It grows faster than the agricultural 

economy over sustained periods of time. 

29

The contrast, with countries where the relative income gap is large, i.e., more 

than twice the average per capita income, is sharp. In the poorest quintile, workers are 

virtually disconnected from the national economy. The elasticity of connection rises 

sharply by income class and exceeds one for the top quintile. These theoretical and 

empirical insights are useful in analyzing the impact of growth on poverty reduction in 

Tamil Nadu. 

c. Human Development and Poverty 

The classical economists including Adam Smith argued that education could well enhance 

the labour-productivity and hence the living standards of the poor. Public and/or 

subsidised “mass” basic education was strongly advocated by the classical economists 

(Himmelfarb, 1984), partly because it was expected to reduce total fertility rates. 

However, more recently, human development is being visualised in a wider context. 

Human development in a broad sense is defined as “enlarging people’s choices in a way 

that enables them to lead longer, healthier and fuller lives” (Ranis and Stewart, 2000). In 

a narrower sense, it relates to the health and education of the people. Poverty and 

human development have a strong inter-face. First, lack of human development in itself 

is poverty. Thus, illiteracy, poor health, and lack of education below a certain threshold 

are constituents of poverty, as discussed earlier in this Chapter. Second, with human 

development, i.e., through proper education and health, choices regarding income 

opportunities widen, and productivity is more augmented than what would generally be 

available to an uneducated person or a person in ill-health. Third, focus on human 

development is a potent means of fiscal intervention to reduce poverty in a country. 

Public expenditure on education and health, especially elementary education and primary 

health can lead to sustained reduction in poverty levels. Positive productivity effects are 

also generated from human infrastructure development, particularly basic health and 

education as noted by Schultz (1988), and Behrman and Deolalikar (1988). 

2.2 Tamil Nadu: Growth and Structural Changes 

a. Structure of GSDP 

The structure of gross state domestic product (GSDP) in many states, but prominently in 

Tamil Nadu, has been shifting away from agriculture towards manufacturing and 

particularly towards services. As indicated in Table 2.1, in Tamil Nadu, the share of 

agriculture in GSDP measured at constant (1999-00) prices has fallen from 20.4 percent 

in 1993-94 to about 12 percent in 2006-07. The share of the secondary sector has also 

fallen but by a small margin from 29.8 percent in 1993-94 to 28 percent in 2006-07. The 

30

share of the tertiary sector in Tamil Nadu has grown from 45.7 percent in 1993-94 to 

58.4 percent in 2006-07. 

Table 2.1: Structural Changes in Tamil Nadu Economy: Share of GSDP at 1999-00 Prices 

(Percent) 

Sectors 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 

Primary of which 23.55 23.28 19.67 18.59 18.64 19.40 17.41 

Agriculture 20.42 20.27 16.92 15.93 16.17 16.90 15.03 

Secondary of which 29.78 30.61 32.20 31.29 29.47 28.32 29.57 

Manufacturing 21.62 22.21 23.71 22.67 20.66 19.09 19.78 

Tertiary 45.65 44.94 47.13 49.52 51.71 52.27 53.02 

Sectors 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 

Primary of which 17.32 17.24 13.80 12.91 13.60 14.01 13.63 

Agriculture 15.00 14.80 11.37 10.54 11.42 11.59 11.46 

Secondary of which 29.85 27.03 29.16 29.43 28.50 28.15 28.03 

Manufacturing 20.10 18.58 18.94 20.01 19.25 19.45 19.88 

Tertiary 52.83 55.73 57.04 57.67 57.90 57.84 58.35 

Source (Basic Data): Government of India, Central Statistical Organisation, various issues. 

These structural shifts of the state economy have significant implications on the 

employment and poverty reduction strategies. Comparing the share of workforce in 

different sectors with those in GSDP, it is noted that the primary sector has a share in 

employment (41.5 percent in 2004-05) that is far exceeding its share in output (13.6 

percent in 2004-05). Correspondingly, the services sector employs far less than its share 

in GSDP. It is only the secondary sector that contributes to a share in employment at 

27.7 percent in 2004-05 and is comparable with its share in GSDP in 2004-05 at 28.5 

percent. 

Table 2.2: Composition and Growth of Sectoral Employment 

Sectors 1993-94 1999-00 2004-05 

Composition of Work Force (in Lakh) 

Primary 154.81 145.65 127.42 

Secondary 62.43 68.53 84.87 

Tertiary 68.36 75.56 94.37 

Total 285.6 289.74 306.66 

Sectoral Shares (percent) 

Primary 54.21 50.27 41.55 

Secondary 21.86 23.65 27.68 

Tertiary 23.94 26.08 30.77 

Total 100.00 100.00 100.00 

Growth Rates (percent) 

Primary -5.92 -12.52 

Secondary 9.77 23.84 

Tertiary 10.53 24.89 

Total 1.45 5.84 

Source: Government of Tamil Nadu (2007), Eleventh Five Year Plan 2007-2012. 

31

Table 2.2 indicates sectoral shares of employment and corresponding growth 

rates in recent years. It can be seen that the growth in agriculture employment during 

1993-94 to 1999-00 and 1999-00 to 2004-05 has been negative. At successive 5 year 

intervals, the agriculture share in total employment has progressively come down. 

Correspondingly, shares of other sectors have gone up. 

b. Sectoral Growth Pattern 

Table 2.3 shows the sectoral growth pattern. The average growth in the primary sector 

and particularly in agriculture has been low. The average annual growth rate in 

agriculture was about 2 percent during 1994-95 to 2006-07. In the first four years of the 

current decade, growth rates of the primary sector and agriculture have been negative. 

Table 2.3: Average Annual Growth Rates: GSDP at Constant Prices 

(Percent) 

Sectors 

1994-95 to 

1998-99 

1999-00 to 

2003-04 

2004-05 to 

2006-07 

1994-95 to 

2006-07 

Primary of which 3.073 -4.173 7.825 2.051 

Agriculture 3.232 -5.267 8.462 1.951 

Secondary of which 5.811 4.723 6.898 5.638 

Manufacturing 4.365 4.855 9.282 5.482 

Tertiary 9.687 5.665 8.589 7.996 

GSDP at 1999-00 prices 6.780 3.645 7.977 6.002 

Population 1.070 0.915 0.820 0.949 

State Per Capita Income 

(Rs.) 5.650 2.705 7.099 5.006 

Source (Basic Data): Government of India, Central Statistical Organisation, various issues. 

As depicted in Chart 2.1, agriculture is characterized by low average growth 

rate with high volatility. During 1994-95 to 2006-07, the average growth rate has been 

about 5.6 percent in the secondary sector and close to 8 percent in the tertiary sector. 

There are signs that the Tamil Nadu economy has emerged out the recession of the early 

years of the decade with the overall GSDP growth during 2004-05 to 2006-07 close to 8 

percent per annum on average. 

Chart 2.1 shows the sectoral growth pattern in Tamil Nadu, bringing out the 

sectoral volatility of the primary sector and the fact that all the sectors went through a 

recession in recent years, but growth is now picking up. The formulation of a medium to 

long term fiscal strategy requires to take into account the changing structure of the state 

economy. 

32

Chart 2.1: Sectoral Growth in Tamil Nadu 

Table 2.4 shows the likely sectoral structure of the Tamil Nadu economy with 

alternative assumptions regarding growth rates during 2014-15 and 2019-20. In the first 

case, when historical growth rates are used, the share of agriculture may shrink to about 

8 percent in 2014-15 and further to 6 percent by 2019-20. 

Table 2.4: Changing Structure of GSDP in Tamil Nadu: Future Outlook 

Alternative Scenarios: Shares in 2014-15 and 2019-20 

(Percent) 

Scenario 1 Scenario 2 

Sectors 

Growth 

Matrix 

Shares in 

2014-15 

Shares in 

2019-20 

Growth 

Matrix 

Shares in 

2014-15 

Shares in 

2019-20 

Primary of which 2.05 9.57 7.25 4.00 9.10 6.60 

Agriculture 1.95 7.99 6.01 4.00 7.65 5.55 

Secondary 5.64 25.96 24.18 8.00 25.31 23.03 

Tertiary 8.00 64.47 68.57 11.00 65.60 70.37 

Total 100.00 100.00 100.00 100.00 

Source: Computed by authors. 

The next case (scenario) is based on more optimistic projections of growth rate 

in agriculture. Even with 4 percent growth rate, which may prove to be difficult to sustain 

over a long period unless accompanied by increased investment in agriculture and 

complementary high growth rates in the industrial and service sectors, the share of 

agriculture goes down to a little more than 7.5 percent by 2014-15. These structural 

changes have significant implications for the growth of employment in the economy. 

33

c. Comparing Tamil Nadu Growth with GDP Growth 

Looking at Tamil Nadu’s performance in terms of growth rate of GSDP (at constant 

prices) since the late nineties, two features stand out: (a) there was a fall in the growth 

rate in the early part of this decade, and (b) this fall was more than that of GDP 

representing average growth performance in the country. In comparative terms, growth 

rate of Tamil Nadu has been more than the GDP growth in many years but the reverse is 

also true for several years. In general, there is greater volatility in Tamil Nadu’s growth 

rate as compared to the GDP growth rate (Chart 2.2) 

Chart 2.2: Growth Rate of Tamil Nadu GSDP and the Overall GDP Growth of 

the Economy 

14.000 

12.000 

10.000 

8.000 

6.000 

4.000 

2.000 

0.000 

-2.000 

1994- 

95 

1995- 

96 

1996- 

97 

1997- 

98 

1998- 

99 

1999- 

00 

2000- 

01 

2001- 

02 

2002- 

03 

2003- 

04 

2004- 

05 

2005- 

06 

2006- 

07 

-4.000 

TNGSDP 

GDP 

Given that the share of secondary and tertiary sectors in Tamil Nadu are higher 

than that in the all-India GDP, and since these are the high growth sectors, it is desirable 

for Tamil Nadu to aim at a growth rate that is at least 0.5 to 1.0 percentage points higher 

than the National GDP growth rate on a sustained basis. If the real GDP growth rate is 

likely to average at about 9 percent (leaving out the current slowdown phase), the Tamil 

Nadu GSDP should be targeted to grow at 9.5 to 10.0 percent per annum in the medium 

term. Given Tamil Nadu’s relatively lower growth of population (see section 2.5), this 

could translate into higher growth in per capita income of about 1.5 to 2.5 percentages 

to the average for India. This will require attracting considerable investment from the 

rest of India and abroad. These trends will lead to a reduction in rural poverty both by 

reduction of the head count ratio in rural areas and migration of some poor to the urban 

areas. There will be a significant impact on poverty reduction in Tamil Nadu provided 

34

policies are in place to absorb larger and larger people migrating out of agriculture into 

the fast growing services sector. 

2.3 Growth and Poverty Reduction in Indian States: Some Empirical Results 

Datt (1997, 1999), Datt and Ravallion (1992, 1997, 1998a, 1998b) and Ravallion and 

Datt (1996a, 1996b, 1999) have analysed the determinants of and factors (including 

policy instruments) that influence the trends in poverty. Some of their main findings can 

be summarised as follows: (a) poverty ratio falls by one percent for every one percent 

increase in net domestic product per capita; and (b) a decomposition of the changes in 

poverty ratio into a growth component (i.e., growth in mean consumption) and a 

redistribution component shows that nearly 87 percent of the observed decline in poverty 

ratio was accounted for by the growth component. The decomposition of growth and 

income distribution and their impact separately on poverty is discussed later in this 

Chapter. Further, the sectoral composition of growth is important as rural economic 

growth contributes far more to poverty reduction than urban economic growth. Also, 

initial conditions relating to human resources and infrastructural development accounted 

for a sizeable share of the differences between states in reducing rural poverty. 

Ravallion and Datt (1999) address specifically the problem of why growth is more 

pro-poor in some economies than others. They examine the evolution of poverty 

measures across major Indian states and cross-state differences in the poverty-reduction 

impact of various sources of growth. They use the diverse experiences of states to shed 

light on the question whether these differences are due to variations in rates and sectors 

of growth, or whether there are differences in the actual impact of that growth including 

the effects of differences in initial state conditions. Their starting point is based largely on 

modelling aggregate (rural and urban) poverty measures, and relaxing the traditional 

assumption that the impact of growth on poverty reduction is uniform across states. 

Ravallion and Datt’s study reveals that non-farm growth is more pro-poor when 

initial conditions in the states indicate higher female literacy rates, higher initial farm 

yields, lower infant mortality, and lower urban-rural disparities in consumption levels and 

landlessness. When these variables are controlled, initial urbanization rates and initial 

non-farm products are not found to have a significant impact on the non-farm output 

elasticity of poverty. By using state poverty measures for India over 1960-1994 and 

allowing for state fixed effects, Ravallion and Datt found that higher farm yields, higher 

state development spending, higher urban and rural non-farm output and lower inflation 

35

were all poverty reducing. The elasticity of poverty to non-farm growth differed 

significantly across states. 

The sectoral breakdown of growth was more significant to poverty reduction in 

states with lower standards of initial conditions. For a growing non-farm economy, 

human resource development and more equal land distribution seem to be strongly 

connected to poverty reduction, as is literacy for pro-poor growth. For example, more 

than half of the difference between the elasticity of the head count index of poverty to 

non-farm output for Bihar (the state with lowest elasticity) and Kerala (with highest) is 

attributable to the latter's substantially higher initial literacy rate (Ravallion and Datt, 

1999). 

Ravallion and Datt used three sets of poverty indices as dependent variables, 

viz., the head count ratio (HCR), the poverty gap index (PGI) and the squared poverty 

gap index for 15 major states including Tamil Nadu. Two output variables were used. 

One, the real agricultural output per hectare of net sown area, and the other real nonagricultural 

output per person. Their results imply that higher output leads to a reduction 

in the poverty ratio. With respect to the HCR, one percentage point growth in real 

agricultural output per hectare of net sown area leads to a reduction of 0.11 percent. 

This effect of real agriculture output is the same for all states. 

In the case of non-agricultural output per person, the impact of growth differs 

from state to state. In the case of Tamil Nadu, its impact on both HCR and PGI is quite 

substantial. Every one percent increase in the real non-agricultural output leads to a 

reduction in the HCR of 0.28 percentage point. This impact is even larger on the povertygap 

ratio, amounting to nearly 0.4 percentage point. Thus, the results highlight that 

increase in non-agricultural income leads to reduction in the head count ratio and an 

even larger reduction in the depth of poverty. 

Increase in real per capita state development expenditure, which represents a 

fiscal variable, is also shown to have a negative impact on the poverty index. One 

percent increase in per capita development expenditure leads to a 0.14 percent fall in the 

HCR and 0.24 percent fall in PGI. The effect of state development expenditure is taken to 

be uniform across states in this exercise. The influence of the inflation rate is poverty 

increasing. One percent increase in the inflation rate leads to a 0.42 percent increase in 

the HCR and 0.59 percent increase in PGI. The results are summarised in Table 2.5. 

36

In the context of interface between growth and poverty, it is useful to 

decompose the impact of income growth and income distribution on poverty. One policy 

concern in recent years has been whether wide differences in the poverty across regions 

in India are due to the differences in the mean income or the differences in the 

distribution of income (Dhongde, 2003). Several attempts have been made in the past to 

decompose the total change in poverty over a period of time (Kakwani and Subbarao, 

1990; Datt and Ravallion, 1992; Shorrocks and Kollenikov, 2001; and Dongde, 2002). 

Table 2.5: Regressions for the State Poverty Measures Allowing for Inter-state 

Differences in Elasticities to Non-farm Output 

Head Count Ratio Poverty Gap Index Squared Poverty Gap 

Variables 

Index 

Coefficient t-ratio Coefficient t-ratio Coefficient t-ratio 

Real agricultural output per 

-0.11 -4.74 -0.201 -5.46 -0.271 -5.35 

hectare of net sown area 

(current + lagged) (YLD) 

Real per capita state 

-0.14 -2.57 -0.241 -2.79 -0.338 -2.86 

development expenditure 

lagged (GOV) 

Real non-agricultural output per person: current + lagged (NFP) 

Andhra Pradesh -0.291 -8.89 -0.425 -8.19 -0.524 -7.37 

Assam -0.199 -5.05 -0.259 -4.13 -0.314 -3.65 

Bihar -0.13 -2.59 -0.335 -4.21 -0.501 -4.58 

Gujarat -0.285 -6.93 -0.444 -6.81 -0.55 -6.14 

Karnataka -0.249 -7.06 -0.36 -6.42 -0.444 -5.77 

Kerala -0.542 -14.8 -0.859 -14.79 -1.087 -13.64 

Madhya Pradesh -0.184 -4.92 -0.318 -5.35 -0.421 -5.16 

Maharashtra -0.191 -5.04 -0.248 -4.13 -0.27 -3.27 

Orissa -0.33 -9.67 -0.531 -9.8 -0.7 -9.42 

Punjab and Haryana -0.343 -10.09 -0.466 -8.65 -0.554 -7.49 

Rajasthan -0.336 -7.39 -0.493 -6.84 -0.605 -6.11 

Tamil Nadu -0.277 -7.97 -0.397 -7.2 -0.479 -6.33 

Uttar Pradesh -0.253 -6.12 -0.359 -5.47 -0.444 -4.93 

West Bengal -0.618 -11.57 -0.937 -11.06 -1.204 -10.35 

Jammu and Kashmir -0.176 -5.12 -0.23 -4.21 -0.273 -3.65 

Inflation rate (INF) 0.419 5.19 0.587 4.58 0.704 4.00 

Time trend 0.017 6.46 0.027 6.51 0.036 6.21 

Root mean square error 0.094 0.1491 0.2047 

R Square 0.918 0.918 0.91 

Source: Ravallion and Datt (2001). 

Note: All variables are measured in natural logarithms. A positive (negative) sign indicates that the variable 

contributes to an increase (decrease) in the poverty measure. The estimated model also included statespecific 

intercept effects, not reported in the Table. Total observations used in the estimation are 272. 

In a recent Study, Dhongde (2003) analysed how much of the total differences in 

the state and national level poverty can be explained by differences between state and 

national mean income, and differences in their income distribution. Based on NSS data, 

37

decomposition of poverty is done for the year 1999-00. 9 Income level is proxied by mean 

consumption expenditure for both rural and urban areas. 10 Fifteen major States in India 

were included, which account for about 97 percent of the total population of the country. 

Due to differences in the price level, the data are adjusted for price fluctuations by the 

using official poverty line. 

The study shows that in the year 1999-00, performances of the states differed 

significantly in terms of their mean level of income and distribution of income. The mean 

consumption expenditure and the corresponding Gini coefficients are shown in Table 2.6 

(for selected states) and Appendix Table 2.1. Having estimated mean income (proxied by 

consumption expenditure) and distribution reflected in their respective gini coefficients, 

spatial decomposition of poverty showed that the variations in the poverty between state 

and nation are largely explained by the differences in their mean income. However, there 

are certain exceptions in urban areas where low level of poverty is the result of not only 

of higher levels of income but also more equitable distribution of income. The study 

draws important policy implications, arguing for higher rates of growth of income at state 

level where the poverty levels are very high. 

Table 2.6: Per Capita Consumption Expenditure and their Gini Coefficients 

Mean Per Capita 

Gini Coefficients 

States 

Expenditure 

Rural Urban Rural Urban 

Andhra Pradesh 604.35 808.3 0.26 0.33 

Karnataka 583.19 786.03 0.28 0.34 

Kerala 711.91 913.45 0.32 0.34 

Tamil Nadu 613.36 951.57 0.31 0.40 

Source: Dhongde (2003). 

The main results of Dhongde’s (2003) study are summarised in Tables 2.7 and 

2.8, and Appendix Tables 2.2 and 2.3. The poverty ratios are adjusted for differences in 

state prices. For the southern states, rural HCR is lower than the all-India rural ratio. The 

difference in all cases is explained largely by their higher mean income levels. In Keral 

and Tamil Nadu, income inequality (i.e., distribution component) increases rural poverty 

ratio. 

9 

10 

For a detailed methodology on spatial decomposition of poverty see Dhongde (2003). 

The expenditure series is not only more stable than the income series but also the differences in the income and 

expenditure narrows down considerably when considered for the poor (Dhongde, 2003). 

38

Table 2.7: Decomposition of the Head Count Ratio in 1999-00: Rural 

States 

Head Count 

Ratio 

(Percent) 

Total Difference 

with all India 

Ratio (Percentage 

Points) 

Mean Component 

(Percentage 

Points) 

Distribution 

Component 

(Percentage 

Points) 


Karnataka 16.38 8.44 7.5 0.95 

Kerala 12.88 11.94 17.22 -5.28 

Tamil Nadu 18.98 5.84 10.15 -4.30 


However, the mean component offsets this negative effect and keeps the rural 

ratio of these states below the national average level. In the case of Andhra Pradesh and 

Karnataka, better distribution of income also has a positive effect on reducing the rural 

poverty ratio. In Tamil Nadu, urban HCR is slightly lower than all-India urban ratio. As in 

the case of rural HCR, mean income component has a positive effect on reducing urban 

ratio while distribution component has a negative effect. 

Table 2.8: Decomposition of the Head Count Ratio in 1999-00: Urban 

States 

Head Count 

Ratio 

(Percent) 


with all India Ratio 

(Percentage 

Points) 

Mean Component 

(Percentage 

Points) 

Distribution 

Component 

(Percentage 

Points) 

Andhra Pradesh 26.35 -1.37 -1.95 0.58 

Karnataka 27.2 -2.22 -3.15 0.93 

Kerala 20.25 4.74 3.73 1.00 

Tamil Nadu 23.81 1.17 2.92 -1.75 


In another study, Deaton and Dreze (2002) provide a decomposition of the fall in 

the poverty head count ratio between 1993-94 and 1999-00 as being due to growth and 

change in inequality (Tables 2.9 and 2.10). Clearly, a very large portion of the decline is 

attributable to growth rather than any reduction in inequality. Growth implies an increase 

in average per capita expenditure (APCE). Column 2 in Table 2.9 shows Deaton and 

Dreze’s estimate of percentage point reduction in HCR associated with a distribution 

neutral one percent increase in APCE. This depends positively on the fraction of people 

living at or near the poverty line. The estimates show (column 4 in Table 2.9) that 

growth alone would have reduced the poverty HCR more than the actual, implying that 

the impact of increased inequality has been used to reduce the effect of growth. In the 

case of rural poverty, growth almost fully accounted for the reduction of poverty with a 

much adverse impact of worsened income distribution. In the case of urban poverty, the 

39

influence of increased income inequality is relatively larger, but the influence of growth is 

predominant. 

Table 2.9 shows that inequality in urban incomes is much higher than that in 

rural incomes. To update the official poverty line used by the Planning Commission, the 

Consumer Price Index for Africultural Laborers (CPI-AL) and the Consumer Price Index 

for Industrial Workers (CPI-IW) are reweighted using national level consumption patterns 

of people around the poverty line in 1973-74. The basic price data are the same as for 

CPI-AL and CPI-IW, but the commodity level prices are weighted using the more recent 

and more poverty relevant weights. 

States 

Table 2.9: Growth and the Head Count Ratio: 1993-94 to 1999-00 

HCR50 

Derivative 

with Respect 

to Growth 

Six Years 

Growth 

Change in 

HCR55 

Inequality 

Fixed 

Change in 

HCR55 

Actual 

Rural 

Andhra Pradesh 29.2 -0.9 2.8 -2.5 -3 

Karnataka 37.9 -0.91 9.5 -9 -7.2 

Kerala 19.5 -0.62 19.6 -10.3 -9.5 

Tamil Nadu 38.5 -0.9 15.7 -13.3 -14.1 

All India 33 -0.88 8.7 -6.8 -6.7 

Urban 

Andhra Pradesh 17.8 -0.62 18.5 -9 -6.9 

Karnataka 21.4 -0.6 26.5 -12.9 -10.6 

Kerala 13.9 -0.46 18.2 -7.1 -4.2 

Tamil Nadu 20.8 -0.66 25.1 -12.9 -9.6 

All India 17.8 -0.56 16.6 -7.4 -5.9 

Source: Deaton and Dreze (2002). 

HCR50 and HCR55 - Head Count Ratio from 50 th Round and 55 th round, 

respectively. 

Bhalla (2002) uses the concept of ‘Shape of Distribution Elasticity’ (SDE), which 

indicates proportionate change in the HCR, following a one percent change in growth, 

assuming that there is no change in the distribution. He defines: 

dP = (g + i)* SDE 

where dP is the change in the head count ratio, g is the growth in average per capita 

consumption and i is the change in the share of consumption of the poor on or near the 

poverty line. Bhalla (2003) argues that the kind of elasticities estimated by Ravallion and 

40

Dutt are not so relevant for predicting changes in the poverty HCR. One has to take into 

account the shape of the income distribution curve around the poverty line. The higher 

the SDE, the larger would be the impact of an increase in the growth rate in reducing the 

poverty. Bhalla observes “… if the impact of growth is assessed via the ‘mediation’ of 

SDE, then the correct growth-poverty elasticity is often 50 to 100 percent larger than one 

which is conventionally estimated. 

Table 2.10: Inequality Measures: Head Count Ratio 

Mean Relative Deviation 

Variance of Logs 

(MRD) 

States 50th 

Round 

55th 

Round 

55th Round 

Adjusted 

50th 

Round 

55th 

Round 

55th Round 

Adjusted 


Karnataka 0.12 0.1 0.12 0.21 0.18 0.22 

Kerala 0.15 0.14 0.16 0.26 0.24 0.27 

Tamil Nadu 0.16 0.14 0.15 0.27 0.23 0.24 

All India – Rural 0.14 0.11 0.14 0.23 0.21 0.24 


Karnataka 0.16 0.18 0.17 0.31 0.32 0.34 

Kerala 0.2 0.17 0.22 0.31 0.32 0.37 

Tamil Nadu 0.21 0.27 0.2 0.39 0.34 0.35 

All India – 0.19 0.2 0.21 0.34 0.34 0.37 

Urban 

All India 0.17 0.18 0.19 0.29 0.29 0.32 


Note: MRD is computed as eh difference between log arithmetic mean and log geometric mean. 

Bhalla’s (2003) estimates of SDE for rural and urban in selective states and all- 

India for 1983, and estimates of the HCR for 1999 using change in inequality and change 

in growth of per capita consumption over 1983 to 1999 are reproduced in Tables 2.11 

and 2.12. 

41

Table 2.11: Growth Inequality Poverty Connections: Rural India, 1983-1999 

States 

Gini 

Change in 

Gini 

Change in 

Inequality 

Growth in Per 

Capita 

Consumption 

Total 

Growth 

1983 1999 (1983-99) (1983-99) (1983-99) (1983-99) 

Andhra Pradesh 29.7 23.8 -22.1 14.6 9.0 23.6 

Karnataka 30.9 24.4 -23.6 16.7 13.2 29.9 

Kerala 31.9 28.9 -9.9 7.6 37.0 44.6 

Tamil Nadu 36.6 28.4 -25.4 15.4 30.1 45.5 

India 30.4 26.3 -14.5 7.8 18.5 26.3 

SDE Change in HCR HCR HCR 

1983 Predicted Annual (1983- 

1983 1999 

(1983-99) 

99) 

Andhra Pradesh 0.8 -19.0 -16.2 27.3 11.0 

Karnataka 0.8 -23.7 -19.1 36.3 17.2 

Kerala 0.9 -39.3 -30.7 40.1 9.4 

Tamil Nadu 0.8 -35.9 -34.1 54.4 20.4 

India 0.9 -24.2 -20.9 48.2 27.3 

Source: Bhalla (2003). 

Notes: 1. SDE is the 'shape of distribution elasticity' defined as the expected change in the poverty for each 1 

percent of growth assuming that distribution of income remains unchanged. 

2.Inequality change is the (log) change in the consumption share of the poor. This change is 

computed as the change in the share of the bottom 20 percent, if the HCR for the base year 1983, 

was below 25 percent, or of the bottom 40 percent if the HCR in 1983 was between 25 and 45 

percent, etc. 

3.Total growth in income is the sum of (log) growth in per capita consumption and log change in 

inequality. 

4. Predicted change in head count ratio is given by the product of total growth and SDE. 

5. Source of data: unit record NSS data for 1983 and 1999. 

Table 2.12: Growth Inequality Poverty Connections: Urban India, 1983-1999 

Gini 

Change 

in Gini 

Change in 

Inequality 

Growth in Per 

Capita 

Consumption 

Total 

Growth 

States 

1983 1999 (1983-99) (1983-99) (1983-99) (1983-99) 

Andhra Pradesh 33.1 31.5 -5.0 1.6 28.8 30.4 

Karnataka 34.2 32.8 -4.2 4.3 26.4 30.7 

Kerala 40.5 32.6 -21.7 13.4 24.2 37.6 

Tamil Nadu 35.2 38.8 9.7 -5.5 41.2 35.7 

India 33.9 34.7 2.3 -1.8 31.5 29.7 

SDE Change in HCR HCR 1983 HCR 1999 

1983 

Predicted 

(1983-99) 

Annual 

(1983-99) 

Andhra Pradesh 0.7 -22.1 -23.7 51.2 27.4 

Karnataka 0.7 -21.7 -19.1 44.2 25.1 

Kerala 0.6 -24.2 -22.4 42.4 20.0 

Tamil Nadu 0.7 -26.1 -25.7 48.5 22.8 

India 0.8 -22.6 -21.7 45.1 23.4 

Source: Bhalla (2003). 

Notes: As in Table 2.11. 

42

The SDE estimates vary across the states for rural areas from a low of 0.48 for 

Punjab to a high of 1.3 for Assam with average for India being 0.92. For urban areas, the 

SDE estimates vary from a low of 0.56 for Punjab to a high of 1.08 for Assam with the 

average of 0.76 for India. For Tamil Nadu, it is 0.8 for rural and 0.7 for urban areas. 

2.4 Inflation and the Incidence of Poverty 

Just like growth, price variations also have a considerable impact on the incidence of 

poverty. Deaton and Tarozzi (1999) examine the role of the price index in the estimation 

of poverty. Accuracy of price and poverty calculations is quite important at times when 

historically high rates of GDP growth do not seem to be resulting in sustained reduction 

in poverty. One of the tools used for these calculations is the measurement of inflation, 

which is important not just for establishing rates of inflation in urban and rural areas but 

comparing price levels between them and between different states. 

The two most important indexes in India are the Consumer Price Index for 

Industrial Workers (CPI-IW) and the Consumer Price Index for Agricultural Labourers 

(CPI-AL). Deaton and Tarozzi (1999) refer to problems with these indexes associated 

largely with the unusually long periods between revisions. They provide the sector wise 

inflation rates estimates over the six year period for India and for the 17 largest states. 

Separate indices are also provided for rural and urban sectors. They utilise information 

from the National Sample Survey (NSS) on prices themselves, providing a measure of 

unit value. Despite problems such as goods and services without defined units, or the 

difference between a unit value and an actual price, they show that the total expenditure 

elasticity of unit value is small. 

Deaton and Tarozzi find that the unit value data from NSS are useful for crosschecking 

other price indices and that there is a good agreement between the rate of 

increase of the official CPI-AL and CPI-IW indices and those reported in the NSS. They 

have also found that although there seems to be little bias in the CPI-IW, the CPI-AL 

might have been growing too quickly (corresponding with what Deaton and Tarozzi 

would expect from using an outdated Laspeyres index). Based on these results, Deaton 

and Tarozzi suggest that between 1987-88 and 1993-94, there was not a great difference 

in the rate of decline between urban and rural poverty (according to the headcount 

measure) and that rural poverty decline was understated in official poverty counts. 

Deaton and Tarozzi also take issue with some of the current poverty calculation 

procedures based on Expert Group Report of 1993 methods that result in urban prices 

43

which are significantly higher than rural prices. They find no evidence in the NSS 

purchase data that corresponds with this finding. There is also a discrepancy between 

the interstate price indexes incorporated in the Expert Group and official poverty lines, 

and those generated by the purchase data in this study. One of the main conclusions of 

their paper is that current official practice produces larger errors in calculating the 

distribution of poverty within a country than in calculating the changes in poverty levels 

over a period of time. Updating base poverty lines involves ‘correcting’ these for urban to 

rural price and interstate price differences, and Deaton and Tarozzi have shown that such 

specific numerical corrections are not easy to make. 

The pattern of sectoral prices in Tamil Nadu can be captured by the sectoral 

implicit price deflators. Table 2.13 shows the relative movement of agricultural, industrial, 

and services sectors obtained with reference to the 1999-00 base series of current and 

constant price GSDP data. The earlier series has been brought to the 1999-00 base with 

suitable conversions factors. It is noted that while all the sectoral prices have increased, 

the largest upward movement has been in the manufacturing sector prices, followed by 

services, which started at a lower level in 1993-94 compared to agriculture but has 

reached comparable levels by 2006-07. The growth in agricultural prices has been 

relatively the lowest. This indicates that the people whose incomes are linked to 

agriculture have experienced least income growth due to the increase in the prices of 

their produce while they pay relatively higher for the purchases that they make of 

outputs of the other two sectors. 

Table 2.13: Implicit Price Deflators in Tamil Nadu: Sectoral Prices 

(Base year 1999-00=100) 

Year Agriculture Manufacturing Services 

1993-94 73.81 72.91 63.81 

1994-95 73.37 76.45 69.39 

1995-96 82.74 80.51 77.13 

1996-97 92.07 85.79 83.14 

1997-98 97.18 88.60 89.41 

1998-99 102.26 99.28 97.97 

1999-00 100.00 100.00 100.00 

2000-01 100.94 103.32 103.77 

2001-02 102.34 105.12 107.85 

2002-03 105.84 107.93 112.65 

2003-04 110.39 113.83 117.72 

2004-05 118.82 121.31 117.57 

2005-06 125.64 125.50 120.57 

2006-07 123.75 131.04 123.40 

Source (Basic data): Government of India, Central Statistical Organisation. 

44

Chart 2.3 highlights that agricultural prices have been most volatile among the 

sectoral prices. Thus, the agricultural prices have shown relatively lowest upward 

movement and have exhibited highest volatility in terms of sectoral inflation rates. 

Chart 2.3: Relative Movement in Sectoral Inflation Rates in Tamil Nadu 

14.00 

12.00 

10.00 

8.00 

6.00 

4.00 

2.00 

0.00 

-2.00 

1994- 

95 

1995- 

96 

1996- 

97 

1997- 

98 

1998- 

99 

1999- 

00 

2000- 

01 

2001- 

02 

2002- 

03 

2003- 

04 

2004- 

05 

2005- 

06 

2006- 

07 

-4.00 

Agriculture Manufacturing Services 

Table 2.14: Terms of Trade between Agriculture, Manufacturing and Services 

Year P(Agr.)/P(Man.) P(Agr.)/P(Ser.) P(Man.)/P(Ser.) 

1993-94 101.24 115.68 114.26 

1994-95 95.97 105.73 110.18 

1995-96 102.77 107.27 104.37 

1996-97 107.33 110.75 103.19 

1997-98 109.68 108.69 99.09 

1998-99 103.00 104.38 101.34 

1999-00 100.00 100.00 100.00 

2000-01 97.70 97.28 99.57 

2001-02 97.35 94.89 97.47 

2002-03 98.06 93.95 95.81 

2003-04 96.98 93.77 96.70 

2004-05 97.94 101.06 103.19 

2005-06 100.11 104.20 104.09 

2006-07 94.44 100.28 106.19 

Source (Basic data): Government of India, Central Statistical Organisation. 

45

Table 2.14 shows the movement in relative terms of trade, highlighting that in 

the latter part of the nineties, agricultural prices went down relative to those of the other 

sectors in Tamil Nadu. In the case of manufacturing this trend, except for one year, 

remains. There has also been a fall in agricultural price terms of trade relative to services 

over the years. In the mid-nineties, it was substantially higher than 100 but has gradually 

fallen and is close to 100. 

These trends indicate that there will be strengthening of migration from 

agriculture to non-agricultural activities both because of relatively lower growth of output 

and relatively unfavorable price movements. 

2.5 Challenges of the Changing Demographic Profile 

The projected population growth rate in Tamil Nadu is estimated to fall from 0.9 percent 

in 2001-05 to about 0.3 percent in 2021-25. This will imply a changing age structure of 

population in Tamil Nadu. 

Table 2.15: Tamil Nadu: Projected Population Characteristics as on 1 st March 2001-06 

Indicators 2001 2006 2011 2016 2021 2026 

Population Proportion (percent) 

0 - 14 years 27.0 24.5 22.6 21.3 19.9 18.7 

15 - 59 years 64.0 65.5 66.2 65.8 65.3 64.2 

15 - 49 years (female population) 56.1 56.6 56.1 54.4 52.5 50.1 

60 + 9.0 10.0 11.2 12.9 14.8 17.1 

2001-05 2006-10 2011-15 2016-20 2021-25 

Population Growth Rate (percent) 0.9 0.7 0.6 0.4 0.3 

Source: Census of India (2001), Report on Population Projections for India and States 2001-26. 

As given in Table 2.15, the percentage share of population in the age group of 0- 

14 will fall from 27 percent in 2001 to about 18.7 percent in 2026. At the same time 

population above 60 years of age will proportionately increase from 9 percent in 2001 to 

17.1 percent in 2026. The share of working population (age group 15-59 years) to total 

population will peak in 2011 at 66.2 percent and thereafter will show a marginal fall. 

However, this is dependent on a balance coming from increasing share of the aged 

population and a decreasing share of the population up to the age of 14. In other words, 

while the dependency ratio will remain roughly stable there is going to be a tangible 

‘aging’ of the population. A poverty reduction strategy has to take into account the 

dynamics of the changing age structure of population while the falling rate of population 

growth will increase per capita income. If the GSDP growth rate remains relatively high, 

there will be extra pressures on health services due to increase in the number of aging 

population. In the immediate run, there needs to be preparedness to absorb the growing 

share of working age population in productive employment. 

46

2.6 Summary 

In summary the following points may be highlighted: 

1. Growth is one of the strongest antidotes to poverty. Redistribution policies can 

strengthen the poverty reducing impact of growth by correcting market failures 

specially the imperfections of the credit and insurance markets. 

2. Initial conditions including the asset bases are critical in enhancing the povertyreducing 

impact of growth. 

3. Economic and employment growth are important for achieving self-sustaining 

poverty reduction, whereas specific programmes for poverty reduction take the 

poor only marginally above the poverty line, keeping them highly vulnerable to 

shocks including inflation shocks. 

4. The sectoral composition of growth is also critical. In Tamil Nadu, as in India as a 

whole, the structure of the economy is shifting away from agriculture. For people 

remaining in agriculture the real growth is likely to be relatively low compared to 

the other sectors. The agricultural prices will also remain more volatile. These 

trends will lead to strengthening of migration trends in Tamil Nadu away from 

agriculture to non-agricultural activities and away from rural to urban areas. 

5. Growth in employment in the primary sector in Tamil Nadu has been negative 

whereas that in secondary and tertiary sector has been positive and large. 

6. The basic challenge in the context of the changing structure of the economy and 

employment is to create the capacity to absorb the migrating population out of 

agriculture into industry and services with proper training and skill development. 

At the same time, productivity in agriculture should not be allowed to fall. This 

will require considerable additional investment in agriculture where government 

will have to play a key role as the returns will not be adequate to attract large 

inflows of private capital into agriculture. 

7. Higher growth, particularly in non-agriculture has been shown to have a 

significant direct impact on reducing poverty in Tamil Nadu. 

In the next Chapter we look at the need and scope for fiscal reforms so as to 

strengthen growth and broad based poverty reduction strategy emphasizing human 

development. These changes are interdependent: expenditure on education and health 

accommodates absorption of labour in the non-agriculture sectors. These enable 

aggregate growth to pick up, generating additional revenues for the government to take 

the required expenditures on health and education. Further, fiscal space is created for 

undertaking additional investment in infrastructure. 

47

48

Chapter 3 

FISCAL REFORMS FOR POVERTY ALLEVIATION 

Musgrave (1999) lists “Relief of Poverty” as an important “Fiscal Task” in a listing of 

Fiscal Tasks for a modern economy. He observes: “… There is a wide agreement that a 

safety net is called for and that some minimum should hold. The problem is how to 

provide it efficiently. The best solution is preventive, for example, education, a buoyant 

labour market, and adequate child care facilities. But direct support is needed as well”. 

The rationale for fiscal intervention for reducing poverty and augmenting Millennium 

Development Goals (MDGs) derives directly from the impact that fiscal policies can have 

on poverty reduction and the relevant MDG targets through subsidies and incometransfer 

policies as well as the public provision of merits services like health and 

education. In addition, there is the indirect impact of fiscal policies on growth and income 

redistribution. In this Chapter, we provide an overview of the state finances of Tamil 

Nadu and the changes needed to accelerate poverty reduction and strengthen human 

development for faster achievement of the MDGs. 

3.1 Fiscal Policies and MDGs: Some Basic Considerations 

Fiscal processes affect poverty levels both indirectly and directly: indirectly, through their 

impact on growth and inflation, and directly through public provision of public goods 

(administration, law, and justice) and merit services (health and education), private 

goods (like water supply and sanitation) often at subsidised prices, and specific poverty 

alleviation programmes. In this context, the quality of access of the poor to public goods 

like law and order, justice, and administration is quite important. Such access often 

requires that private costs be incurred. 

From a public choice perspective also, redistribution of incomes generally 

towards backward classes and, particularly towards the poor, is expected because the 

backward classes and the poor have a larger share in the total votes than their share in 

income. Many of the under-privileged sections of the society, with a high incidence of 

poverty in their respective classes, have mandated political representations like those 

arising from reserved constituencies for scheduled castes and scheduled tribes in India, 

which can be used to support redistributive policies in favour of the poor. 

In India, all three tiers of the government, namely, central, state, and local have 

significant MDGs based poverty alleviation programmes. The central and the state 

governments sponsor a variety of programmes and schemes aimed at these objectives. 

49

Government budgets support poverty alleviation programmes through a variety of income 

transfer schemes, including employment guarantee and self-selective food-for-work type 

of programmes. Such direct support, however, is only a fraction of the much larger 

indirect subsidisation programme. In these subsidy provisions, although considerably 

larger resources are involved, most benefits could be appropriated by the non-poor if the 

subsidy is not designed and administered carefully. 

Flow Chart 3.1 provides an outline of the channels through which fiscal policies 

can affect the incidence of poverty in a country. First, the size of the budget itself 

indicates the capacity of the government to intervene. Secondly, the structure of its 

expenditure programmes determines the relative strengths of direct and indirect 

interventions for poverty alleviation. Expenditures on services that are in the nature of 

public goods, like law and administration, can serve as pro-poor instruments, provided 

access costs are taken care off. Thirdly, expenditure on education and health constitute a 

long-term strategy for combating poverty through human development. Fourthly, 

expenditure on infrastructure increases growth prospects and thereby reduces poverty. 

These are all avenues of indirect intervention. 

Flow C hart 3.1: Fiscal Policies and Poverty Reduction: 

Direction and Factors Strengthening Im pact 

Higher 

budgetary 

resources 

P o licies 

reducing 

Subsidised 

incom e social and 

in eq u alities 

eco n o m ic 

services 

Higher 

growth 

H ig h er H ealth E d u catio n 

Investm ent 

in in frastructure 

Low incom e 

and asset 

inequality 

B etter targeted 

sub sid ies 

D irect 

in terv en tio n 

Labour intensive 

growth 

M in im isin g 

leakages 

H igher 

Em ployment 

Lower 

poverty 

Social 

securites 

transfers 

Low access 

costs 

Poverty 

allev iatio n 

programmes 

50

Bardhan (1996) emphasizes that often, in the name of the poor, excessive, 

untargeted and distortionary policy intervention has been resorted to in many countries. 11 

Even if all markets, including in particular, labour markets were functioning well, there 

would always be some individuals who are weakly connected to the income generation 

processes of the economy because of their particular circumstances such as, severe 

disabilities. The functioning of the labour market is particularly important, as labour is the 

main asset of the poor. 

The composition of public expenditure is also quite important. Effective coverage 

of poor by government programmes depends on the institutional environment including 

local administrative capabilities, the incentives facing local administrators, and their 

interface with the poor. Ranis and Stewart (2000) suggest decomposing public 

expenditure on human development into three components: 

i. Public expenditure ratio: share of public expenditure in GDP, 

ii. Human development allocation ratio: share of human development expenditure in 

total public expenditure, and 

iii. Human development priority ratio: share of priority human development 

expenditure in total human development expenditure. 

They have argued that, with decentralisation, the human development allocation 

and priority ratios almost always improve. Between growth and human development, 

Ranis and Stewart talk about “two chains”, one running from human development to 

economic growth, and the other from economic growth to human development. In the 

first chain, with human development, productive capabilities of economic agents 

(workers, managers, and farmers) increase, the organisational capabilities also increase, 

leading to better technology and production processes. The structure of output contains 

greater variety, exports increase, and overall growth increases. 

11 Bardhan (2006) observes: “In the recent past and, even currently, the governments in many poor countries have 

heavily interfered in the market in the name of helping the poor. They have used high tariffs, quantitative trade 

restrictions and overvalued exchange rates, subsidised credit and under priced energy, water, and other publicly 

provided inputs to help domestic producers. They have used price control and made restrictions on agricultural 

commodities to keep food prices low for the urban poor. They have used industrial and investment licences to 

keep larger producers at bay and help small-scale, sometimes inefficient, producers. They have imposed high 

marginal tax rates and public sector dominance in production with the objective of reducing concentration of 

income and wealth. The experience of the last four decades has shown that many of these policies have been 

counterproductive from the point of view of both efficiency and equity”. 

51

The chain from growth to human development can be traced as follows: with 

higher growth, government earns and spends more relative to GDP, the composition of 

its spending favour the human development priority sectors more; at the same time, with 

higher per capita incomes, household expenditure also increases in favour of health and 

education. The impact on poor households is higher when growth and fiscal policies are 

human development-oriented. 

Lipton and Ravallion (1995) note that undifferentiated subsidisation of human 

capital formation is unlikely to be inherently pro-poor. They observe: “Income elasticities 

of demand for education and health care of unity or higher are plausible for LDCs (Theil 

and Finke, 1985; Schieber and Poullier, 1989; and Gertler and van der Gaag, 1990). 

However, a consensus is emerging in favour of differentiated expansion in primary 

education and basic health care, as an instrument for poverty reduction (World Bank, 

1990)”. 

Empirical studies on incidence of subsidies note that existing allocations to 

primary education and basic health care are generally pro-poor, as much of the subsidies 

per head received by the poor account for a relatively higher proportion of their income 

or expenditure. Also, the rich shift to private market for health and education in search of 

better quality of services. Allocations to education and health care above primary level, 

however, favour the non-poor as they have better access to higher education and 

specialty hospitals. 

3.2 State Finance of Tamil Nadu: An Overview 

This section looks at Tamil Nadu’s state finances in a medium term perspective in the 

context of the growth and the changing structure of the Tamil Nadu economy. Tamil 

Nadu has historically been one of the fiscally better managed states, although like all 

other state governments, Tamil Nadu had also witnessed deterioration in various 

indicators of fiscal balance towards the end of the nineties and the early years of the 

current decade including large revenue deficits, and large fiscal deficits relative to GSDP. 

Tamil Nadu’s major strength emanates from its distinction of having the highest tax- 

GSDP ratio among all Indian states. 

The reasons for deterioration during the late nineties up to the first few years of 

the current decade are to be found in low growth rates in the first three years of the 

decade, the impact of salary increases in the wake of the recommendations of Fifth 

Central Pay Commission in combination with the fact that Tamil Nadu has a very high 

52

atio of government employees to population, and high nominal interest rates in the late 

nineties. The situation has progressively improved in recent years. In order to examine 

the medium term prospects, it is useful to review the trends in state finances over a long 

period. Table 3.1 provides the time-profile of major fiscal aggregates relative to GSDP 

over the period 1993-94 to 2009-10 BE. 

Table 3.1: Tamil Nadu State Finances: Selected Fiscal Aggregates 

(Percent of GSDP 1999-00 base series) 

Indicators 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 

Own Tax Revenues 7.85 8.00 8.61 8.42 7.90 7.66 

Own Non-tax Revenues 1.14 1.04 1.01 0.92 1.00 0.89 

State's Own Revenue 8.99 9.04 9.62 9.34 8.90 8.56 

Total Central Transfers 4.19 3.58 3.12 3.26 3.44 2.77 

Share in Taxes and Duties 2.56 2.39 2.20 2.31 2.50 1.94 

Grants 1.63 1.19 0.91 0.95 0.93 0.83 

Total Revenue Receipts 13.18 12.62 12.73 12.60 12.33 11.33 

Revenue Expenditure 14.31 13.19 13.11 13.76 13.57 14.07 

Revenue Surplus/Deficit(-) -1.13 -0.57 -0.37 -1.16 -1.24 -2.74 

Fiscal Surplus/Deficit (-) -2.22 -2.05 -1.51 -2.58 -1.93 -3.80 

Capital Outlay 0.90 0.93 0.71 0.97 1.33 0.92 

Outstanding Liabilities 18.69 18.30 17.98 18.06 17.61 18.36 

1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 

Own Tax Revenues 8.14 8.36 8.73 9.06 9.06 9.64 

Own Non-tax Revenues 0.94 1.12 0.99 1.17 1.19 1.10 

State's Own Revenue 9.08 9.48 9.72 10.23 10.26 10.74 

Total Central Transfers 3.02 2.94 2.85 2.93 2.90 3.43 

Share in Taxes and Duties 2.01 1.90 1.93 1.92 2.01 2.11 

Grants 1.01 1.04 0.93 1.00 1.21 1.32 

Total Revenue Receipts 12.10 12.42 12.57 13.16 13.48 14.17 

Revenue Expenditure 15.38 14.76 14.41 16.22 14.37 14.52 

Revenue Surplus/Deficit (-) -3.28 -2.34 -1.84 -3.06 -0.89 -0.35 

Fiscal Surplus/Deficit (-) -4.01 -3.46 -3.18 -4.26 -3.18 -2.77 

Capital Outlay 0.48 1.05 1.19 1.03 2.04 2.27 

Outstanding Liabilities 21.19 22.76 25.45 27.73 29.34 24.81 

2005-06 2006-07 2007-082008-09 RE2009-10 BE 

Own Tax Revenues 10.44 10.57 9.80 9.89 9.76 

Own Non-tax Revenues 1.16 1.30 1.09 1.62 0.86 

State's Own Revenue 11.60 11.87 10.90 11.51 10.62 

Total Central Transfers 3.59 3.70 4.83 4.37 4.12 

Share in Taxes and Duties 2.24 2.43 2.67 2.44 2.30 

Grants 1.35 1.27 2.16 1.93 1.82 

Total Revenue Receipts 15.19 15.57 15.73 15.88 14.75 

Revenue Expenditure 14.32 14.57 14.23 15.88 15.01 

Revenue Surplus/Deficit (-) 0.87 1.01 1.50 0.00 -0.26 

Fiscal Surplus/Deficit (-) -1.01 -1.51 -1.22 -2.65 -2.99 

Capital Outlay 1.81 2.27 2.47 2.55 2.55 

Outstanding Liabilities 25.70 22.91 21.40 21.42 21.61 

Source (Basic Data): State Budget Documents of Tamil Nadu, various years. 

53

a. Evolution of Fiscal Imbalance 

Focusing first on fiscal imbalance, we observe that revenue deficit relative to GSDP had 

deteriorated from a low of 0.4 percent in 1995-96 to a peak of 3.3 percent in 1999-00. 

Thereafter there has been an improvement. Since 2005-06, the revenue account in Tamil 

Nadu has been in surplus. In 2008-09 RE, the revenue surplus is zero, meeting the Fiscal 

Responsibility and Budget Management Act (FRBMA) targets (Chart 3.2) but thereafter 

turned deficit. In the nineties, fiscal deficit had peaked in 1999-00 at 4.0 percent of 

GSDP. After that it improved in the next two years. It rose to 4.3 percent of GSDP in 

2002-03. But this rise reflects a one-time adjustment on account of State Electricity 

Board. Fiscal deficit in Tamil Nadu in 2009-10 BE is less than 3 percent, signaling 

achievement of the FRBMA target. 

Chart 3.2: Revenue and Fiscal Deficit as Percent of GSDP: Tamil Nadu 

5.00 

4.00 

3.00 

2.00 

1.00 

0.00 

-1.00 

-2.00 

19 

93- 

94 

3.80 4.01 4.26 

3.28 3.46 3.18 3.06 3.18 

2.58 2.74 

2.77 2.65 2.99 

2.22 2.34 

2.05 1.93 

1.84 

1.51 

1.51 

1.13 1.16 1.24 

1.01 1.22 

0.89 

0.57 0.37 0.35 

0.00 0.26 

19 

94- 

95 

19 

95- 

96 

19 

96- 

97 

19 

97- 

98 

19 

98- 

99 

19 

99- 

00 

20 

00- 

01 

20 

01- 

02 

20 

02- 

03 

20 

03- 

04 

20 

04- 

05 

20 

05- 

06 

20 

20 

20 

-0.87 06- -1.01 07- 08- 

07 08 -1.50 

09 

RE 

20 

09- 

10 

BE 

Fiscal Deficit 

Revenue Deficit 

Historically, Tamil Nadu has been one of the better performers in maintaining 

fiscal discipline. Table 3.2 places Tamil Nadu relative to other general category 

(southern) states in terms of four important indicators of fiscal performance. 

54

Table 3.2: Tamil Nadu in Inter-state Comparison: Selected States: 2007-08 (RE) 

(Percent) 

States 

Interest 

Payment to 

Revenue 

Expenditure 

Interest 

Payment to 

Revenue 

Receipts 

Own Tax 

Revenue/ 

Revenue 

Expenditure 

Revenue 

Deficit/ 

Fiscal 

Deficit 

Capital 

Outlay/ Fiscal 

Deficit 

Andhra Pradesh 15.5 15.4 56.4 -4.9 139.8 

Karnataka 12.5 11.6 71.9 -49.0 146.0 

Kerala 18.2 22.1 53.5 67.3 21.7 

Tamil Nadu 13.5 13.2 64.1 -12.4 105.4 

All States 17.0 16.4 48.4 -20.9 118.9 

Source (Basic Data): RBI (2008), State Finances: A Study of Budgets 2008-09, December. 

b. Outstanding Liabilities and its Determinants 

The accumulation of primary deficit, that remains unneutralized by the excess of growth 

over interest rate results in an increase in outstanding liabilities of the government. In 

Tamil Nadu, the outstanding liabilities have increased from a level of 18.7 percent in 

1993-94 to 29.3 percent in 2003-04, a rise of more than 10 percentage points in 10 years 

(Table 3.1 and Chart 3.3). After this year, it has started stabilizing. It actually fell for a 

few years, but is slated to be at 22 percent in 2009-10 BE. This may be an acceptable 

level considering that the Twelfth Finance Commission (TFC) has suggested an overall 

target of 28 percent for the states as a whole. 

The TFC has recommended debt relief to the states in the form of restructuring 

of all central loans with state governments as on March 31, 2005 by consolidating and 

rescheduling at 7.5 percent interest rate repayable over twenty years. This was made 

conditional on a state enacting a Fiscal Responsibility Legislation, which Tamil Nadu 

government had already enacted in 2003. With some amendment, Tamil Nadu became 

eligible for the benefit of rescheduling and debt write-off. As a result, Rs. 6872 crore of 

outstanding central loans on Tamil Nadu government’s books were to be restructured. 

The interest gain is estimated at Rs. 1195 crore in Tamil Nadu’s case over the period 

2005-10. The TFC had also recommended debt write-off linked to reduction in the 

revenue deficit of the state government. Under the scheme, a certain proportion of 

repayment of rescheduled debt is to be written off by Government of India over the 

period 2005-06 to 2009-10. The quantum of write-off is linked to the absolute amount of 

reduction in the revenue deficit each year with the ultimate objective of eliminating the 

revenue deficit by 2008-09. 

55

Chart 3.3: Profile of Tamil Nadu State Debt Relative to GSDP 

35.00 

30.00 

25.00 

20.00 

29.34 

27.73 

25.45 

24.81 25.70 

21.19 22.76 22.91 

21.40 21.421.61 

18.69 18.30 17.98 18.06 17.61 

18.36 

15.00 

10.00 

5.00 

0.00 

1993-94 

1994-95 

1995-96 

1996-97 

1997-98 

1998-99 

1999-00 

2000-01 

2001-02 

2002-03 

2003-04 

2004-05 

2005-06 

2006-07 

2007-08 

2008-09 RE 

2009-10 BE 

Outstanding Liabilities to GSDP Ratio 

c. Own Tax Revenues 

Relative to GSDP, own tax revenues in Tamil Nadu have historically been one of the 

highest among states for many years. The time profile of the ratio of own tax revenues 

to GSDP indicates that after remaining below 9 percent for most years in the nineties 

(with the exception of 1995-96), it improved to above 9 percent in 2001-02 and above 10 

percent for the next two years 2004-05 and 2005-06 and thereafter little below 10 

percent (Table 3.1). 

Chart 3.4 indicates this upward rise in the own tax to GSDP ratio since 2001-02. 

It is because of this consistent buoyant performance that Tamil Nadu has overtaken 

other states in terms of tax-GSDP ratio. Tamil Nadu has had the distinction of showing 

the highest tax-GSDP ratio among the general category states. At the average of 9.3 

percent during 2001-04, its tax-GDP ratio was more than double of that of West Bengal. 

It has overtaken Kerala, which used to be the highest tax-GSDP ratio state earlier in the 

nineties. Only Karnataka comes anywhere close to Tamil Nadu’s tax-GSDP ratio. 

56

Chart 3.4: Own Tax Revenues Relative to GSDP: Sustained Growth 

11.00 

10.50 

10.00 

9.50 

9.00 

8.50 

8.00 

7.50 

7.00 

6.50 

6.00 

19 

93- 

94 

7.85 8.00 8.61 8.42 

7.90 7.66 

8.14 8.36 8.73 9.06 9.06 9.64 

19 

94- 

95 

19 

95- 

96 

19 

96- 

97 

19 

97- 

98 

19 

98- 

99 

19 

99- 

00 

20 

00- 

01 

20 

01- 

02 

20 

02- 

03 

20 

03- 

04 

20 

04- 

05 

20 

05- 

06 

10.44 10.57 9.80 9.89 9.76 

20 

06- 

07 

20 

07- 

08 

20 

08- 

09 

RE 

20 

09- 

10 

BE 

Own Tax Revenues 

Table 3.3: Tamil Nadu Own Tax Revenues: 2002-03 to 2009-10 

(Percent) 

Taxes 

2002- 

03 

2003- 

04 

2004- 

05 

2005- 

06 

2006- 

07 

2007- 

08 

2008- 

09 RE 

2009- 

10 BE 

As Percent to GSDP 

Sales Tax 6.06 6.26 6.47 6.96 6.75 6.01 5.99 5.88 

Motor Vehicle Tax 0.47 0.53 0.51 0.50 0.48 0.49 0.49 0.50 

Stamp and Registration Duties 0.68 0.75 0.80 0.93 1.14 1.26 1.27 1.29 

State Excise 1.33 0.94 1.27 1.42 1.52 1.58 1.64 1.66 

Others 0.51 0.59 0.59 0.62 0.68 0.47 0.50 0.43 

Total Own Tax Revenues 9.06 9.06 9.64 10.44 10.57 9.80 9.89 9.76 

Growth Rates 

Sales Tax 14.36 14.76 18.10 19.69 13.97 2.42 15.14 11.18 


Stamp and Registration Duties -5.16 21.99 21.87 29.95 43.77 26.93 16.43 14.99 

State Excise 2.69 -21.60 53.82 24.62 25.49 19.51 19.84 15.00 

Others 4.39 26.89 15.51 16.11 29.92 -21.59 24.06 -3.92 


Buoyancy 

Sales Tax 2.30 1.33 1.28 1.74 0.80 0.16 0.98 0.84 


Stamp and Registration Duties -0.83 1.99 1.55 2.64 2.50 1.80 1.06 1.13 

State Excise 0.43 -1.95 3.80 2.17 1.45 1.30 1.28 1.13 

Others 0.70 2.43 1.10 1.42 1.71 -1.44 1.55 -0.30 


Source: State Budget Documents, various years. 

57

Table 3.3 shows the performance of own tax revenues in Tamil Nadu relative to 

GSDP in terms of major tax revenue sources. It also gives annual buoyancy and growth 

rates of major taxes. GSDP is taken as the 1999-00 base series. By far the sales taxes are 

the most important source of own tax revenue in Tamil Nadu, followed by state excise 

duties and stamp and registration duties. The slightly lower budgeted figure for own tax 

revenue relative to GSDP in 2009-10 reflects consensus of the revenue impact of 

introduction to VAT which the state has recently implemented. 

The introduction of state value added tax (VAT) has implied some changes in the 

tax-GSDP ratio. The current practices in implementation imply restrictions on the taxrates 

that a state may have. For the states in general, the tax rates of 4, and 12.5 have 

been prescribed by the Empowered Committee of Finance Ministers. An indicative list of 

goods to be placed in different categories has also been provided. Tamil Nadu has 

historically been a highly taxed state. The shift to VAT essentially means that its tax rates 

will be in line with other states although there is some flexibility in the selection of goods 

that are placed in the exempted and lower rate category. As a result in 2007-08, the 

growth rate of sales tax fell drastically. The sales tax buoyancy has recovered since than 

but is still below one. As discussed earlier, the share of services in GSDP will continue to 

increase. But states are not able to tax the services since it has been placed in the union 

list. The fastest growth sector in Tamil Nadu is the services sector, taxation of which is 

reserved for the central Government. Much will depend on how the proposed goods and 

services tax (GST) takes shape. 

In BE 2009-10, as shown in Table 3.3, growth rates have fallen for most of the 

taxes. Sales tax revenue has fallen showing the impact of introduction of VAT. 

Appendix Table 3.1 shows the sequence in which states have introduced VAT in the 

country. However, as petroleum prices have increased substantially in 2008-09, and since 

special rates apply for petroleum grant products, it is expected that tax revenue 

buoyancy will remain high even in the case of State VAT. 

d. Non-tax Revenue: Untapped Potential 

Revenue collection in Tamil Nadu relies primarily on the state’s own tax system (about 70 

percent). Another 15 percent of revenue comes from shared central taxes devolved to 

Tamil Nadu. Only 7 percent of total revenue is from non-tax revenue. Tamil Nadu ranks 

low in non-tax revenue relative to 14 major Indian states. Part of the reason is that some 

user charges (such as bus fares) do not go directly to the state’s treasury but are 

58

collected by state-owned enterprises. In non-tax revenue there is some potential for 

increases. 

e. Fiscal Transfers to Tamil Nadu 

Fiscal transfers to Tamil Nadu come from Finance Commission transfers, Plan grants, and 

grants under various centrally sponsored schemes. In the aggregate, the transfers fell 

from 4.2 percent in 1993-94 to the level of 2.8 percent in 1998-99. These remained 

around 3 percent until 2003-04 and have started rising since then to 4.8 percent in 2007- 

08 and thereafter came down to 4.1 percent in BE of 2009-10. 

Table 3.4: Grants Recommended for Tamil Nadu by the Twelfth Finance 

Commission 

(Rs. crore) 

Details 2005-06 2006-07 2007-08 2008-09 2009-10 Total 

Roads and Bridges 0.0 303.6 303.6 303.6 303.6 1214.4 

Buildings 0.0 60.6 60.6 60.6 60.6 242.6 

Forests 6.0 6.0 6.0 6.0 6.0 30.0 

Heritage Conservation 0.0 10.0 10.0 10.0 10.0 40.0 

State Specific Needs 0.0 75.0 75.0 75.0 75.0 300.0 

Local Bodies Rural 174.0 174.0 174.0 174.0 174.0 870.0 

Local Bodies Urban 114.4 114.4 114.4 114.4 114.4 572.0 

Calamity Relief 156.8 164.7 172.9 181.5 190.6 866.5 

Total 451.2 908.3 916.5 925.2 934.2 4135.4 

Source: Report of Twelfth Finance Commission, 2004. 

The Twelfth Finance Commission (TFC) has fixed Tamil Nadu’s share in the total 

divisible pool of central taxes at 5.305 percent as opposed to 5.385 percent 

recommended by the Eleventh Finance Commission. This marginal decrease was 

neutralized since states’ share in the centre’s divisible tax pool has been increased from 

29.5 percent to 30.5 percent. Thus, the share of Tamil Nadu has remained unchanged at 

1.6 percent of central taxes during 2005-06 to 2009-10. However, Tamil Nadu has not 

obtained any special grants for education and health. It is the higher overall taxbuoyancy 

of central taxes that has increased Tamil Nadu’s share of central taxes relative 

to its own GSDP. The TFC has also recommended (Table 3.4) for Tamil Nadu, Rs. 1214 

crore in grants for maintenance of roads and bridges, Rs. 242 crore for maintenance of 

public buildings, Rs. 30 crore for forests, Rs. 40 crore for Heritage conservation, Rs. 250 

crore for development of urban areas and Rs. 50 crore for sea erosion, Rs. 1442 crore for 

local bodies, and Rs. 867 crore for calamity relief, over 2005-06 to 2009-10. As a result, 

59

for the five-year period Tamil Nadu has been given a total grant of Rs. 4135 crore by the 

TFC. A grant of comparable magnitude has never been given to Tamil Nadu by earlier 

FCs. 

f. Structure of Expenditure 

Revenue expenditure constitutes by far the largest share of total expenditure. Of which, 

interest payments and pensions constitute important components of committed 

expenditures. Revenue expenditures as a whole have been rising since 1995-96 when it 

was about 13.1 percent of GSDP. It rose to a peak of about 15.4 percent in 1999-00, fell 

marginally and rose to 16.2 percent of GSDP in 2002-03, and fell there after and rose to 

15.8 percent of GSDP in 2008-09 RE. In 2009-10 BE, these are slated to be 15.0 percent 

of GSDP (Table 3.1) Within revenue expenditures, the expenditures on health and 

education are of critical importance. Table 3.5 shows that the share of revenue 

expenditure on education in 2009-10 BE is lower than what it was in 2001-02. The share 

of health expenditure has increased by a small margin but it has not reached one percent 

till 2009-10 BE. 

Table 3.5: Expenditure on Health and Education in Tamil Nadu 

(Rs. crore) 

Sector 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 RE2009-10 BE 

Education 4058.74 3970.17 4402.55 4597.28 4915.51 5967.91 6732.08 9166.81 10472.56 

Health 858.63 865.04 944.28 1304.16 1392.87 1551.97 1737.06 2474.27 2995.50 

(% to GSDP) 

Education 2.83 2.56 2.61 2.43 2.32 2.56 2.23 2.63 2.65 

Health 0.6 0.56 0.56 0.69 0.66 0.67 0.58 0.71 0.76 

Source (Basic Data): State Budget Documents and Budget speech 2009-10. 

Note: Education includes general and technical education Health includes medical and public health and family 

welfare. 

A major contribution of state finances to the state economy comes in the form of 

capital expenditure, particularly if it is devoted to building infrastructure (Chart 3.5). In 

Tamil Nadu it has been rather low in the nineties remaining less than one percent of 

GSDP. However, since 2003-04, it has been rising and it is now close to the benchmark of 

3 percent suggested by the Twelfth Finance Commission. These have been increasing 

over time in per capita terms (see Appendix Table 3.2 for per capita poverty reducing 

expenditures in recent years). This trend has to be strengthened further. 

60

Chart 3.5: Capital Outlay as percent of GSDP: Growing but Inadequate 

3.00 

2.50 

2.00 

2.04 

2.27 

1.81 

2.27 

2.47 

2.55 2.55 

1.50 

1.33 

1.00 

0.50 

0.90 0.93 

0.71 

0.97 

0.92 

0.48 

1.05 1.19 1.03 

0.00 

1993-94 

1994-95 

1995-96 

1996-97 

1997-98 

1998-99 

1999-00 

2000-01 

2001-02 

2002-03 

2003-04 

2004-05 

2005-06 

2006-07 

2007-08 

2008-09 RE 

2009-10 BE 

Capital outlay 

3.3 Fiscal Restructuring for MDGs Based Poverty Reduction 

Fiscal restructuring in Tamil Nadu has to be undertaken in a medium term framework in 

the context of the Fiscal responsibility and Budget Management Act (FRBMA). 

Fiscal Responsibility Act 

Tamil Nadu was amongst the first few states to enact Fiscal Responsibility Act, which lays 

the foundation for aggregate fiscal discipline. This Act aims at ensuring fiscal stability 

and sustainability for Tamil Nadu while enhancing the scope of improving social and 

physical infrastructure as well human development. It emphasizes, for this purpose, the 

need for achieving revenue surplus, reduction in fiscal deficit, and prudent management 

of debt. It envisages limits on fiscal and revenue deficits as well as government 

guarantees. It also places emphasis on the need for greater transparency and provides 

for a medium term fiscal framework. The fiscal responsibility legislation envisages that 

the following documents be included in the budget. 

a. Macroeconomic Framework Statement 

This Statement contains an overview of the State’s Economy, an analysis of growth and 

sectoral composition of GSDP, an assessment related to State Government finances and 

future prospects. 

61

. Medium Term Fiscal Policy Statement 

This statement contains three year rolling targets of revenue deficits (RD) relative to total 

revenue receipts (TRR), gross fiscal deficit (GFD) as a percentage of GSDP and total 

outstanding liabilities as percentage of GSDP. This statement includes various 

assumptions behind the fiscal indicators and an assessment of sustainability relating to: 

(i) the balance between revenue receipts and revenue expenditure; (ii) the use of capital 

receipts including borrowings for generating productive assets; (iii) the estimated yearly 

pension liabilities worked out on actuarial basis for the next ten years. Table 3.6 gives 

the Tamil Nadu Medium Term Fiscal Policy statement going up to 2011-12. It shows a 

fiscal deficit which is below 3 percent of GSDP with zero revenue surplus. 

c. Fiscal Policy Strategy Statement 

As per the provisions of the FRBMA, the Fiscal Policy Strategy Statement contains the 

following: 

(i) Fiscal policies of the State Government for the ensuing year relating to taxation, 

expenditure, borrowings and other liabilities, lending, investments, contingent 

liabilities, user charges on public goods/ utilities and description of other activities 

such as guarantees and activities of Public Sector Undertakings. 

(ii) Strategic priorities of the State Government in the fiscal area for the ensuing year. 

(iii) The key fiscal measures and the rationale for any major deviation in fiscal measures 

pertaining to taxation, subsidy, expenditure, borrowings and user charges. 

(iv) Evaluation of current policies of the State Government vis-à-vis the fiscal 

management principles. 

Table 3.6: Tamil Nadu Medium Term Fiscal Policy Statement: Budget 2009-10 

(Percent) 

Fiscal Indicators Actuals Projections 

Revenue surplus as % of 

total revenue receipts 

As percentage of GSDP 

2004- 2005- 2006- 2007- 2008- 2009- 2010- 2011- 

05 06 07 08 09 BE 10 BE 11 12 

-2.47 5.75 6.47 9.57 0.01 -1.76 0.11 0.12 

Revenue Surplus -0.37 0.92 1.04 1.50 0.00 -0.26 0.00 0.00 

Fiscal Deficit 2.95 (-)1.06@ 1.56 1.32 2.65 2.99 2.73 2.73 

Outstanding Liabilities 26.45 27.23 23.72 21.40 21.42 21.61 21.69 21.76 

Own Tax Revenues 10.25 11.02 11.95 9.80 9.89 9.76 9.63 9.30 

Note: @ this includes an adjustment of prior period capital expenditure amounting to Rs. 224.90 crore. 

Excluding this, fiscal deficit would be 2.86 percent of GSDP. 

62

The Fiscal Policy Strategy Statement has nine Disclosure Statements regarding 

select indicators of fiscal situation, components of state government liabilities and 

interest cost of borrowings, Consolidated Sinking Fund, guarantees given by the state 

government, outstanding risk-weighted guarantees, guarantee redemption, assets, 

revenue demands raised but not realised and outstanding miscellaneous liabilities. 

The state’s medium term expenditure policy has to be consistent with its FRBMA. 

The deficit reduction targets have to go hand in hand with expenditure restructuring so 

as to achieve the objectives of the Act while bringing about fiscal restructuring that would 

facilitate achieving MDGs base poverty reduction in Tamil Nadu. 

3.4. Medium Term Fiscal Reforms for MDGs Based Poverty Reduction 

Tamil Nadu’s Fiscal Policy, although serving well, can be further strengthened and 

directed towards MDGs based poverty reduction. Expenditure reforms are key to this 

objective. The following are some of the key proposed components of restructuring. 

a. Increasing Share of Expenditure on Health and Education 

Expenditures translate into outputs in the short run and outcomes in the final analysis. 

Thus, expenditure on education translates into changes in the literacy rate and other 

educational attainments. Similarly, expenditure on health makes an impact on lowering of 

IMR, MMR, and increasing life expectancy. In the case of capital expenditures also, there 

is need to focus on the quality and form of capital expenditure. 

For improving health infrastructure in the rural areas, we have focused on the 

national norms for provision of rural health infrastructure. National norms suggest the 

provision of at least one sub-centre per 5000 population, one primary health centre 

(PHC) per 30,000 population and one community health centre (CHC) per 1,20,000 

population in plain areas. We have used these norms to examine the adequacy of 

physical health facilities in rural Tamil Nadu. 

The structure of health facilities in Tamil Nadu differs from most other Indian 

states. The state does not have CHCs, but has some upgraded PHCs which are 

comparable to CHCs. The state however has a number of taluk and non-taluk hospitals at 

the sub-district level which are not there in most other states. As per information 

provided by the state government on capital and recurrent cost of building new SCs and 

PHCs, the capital cost of building new SCs, PHCs and upgraded PHCs is about Rs. 63 

crore. To this, if one adds the cost of replacing rented buildings of SCs and PHCs by 

63

government buildings, the capital cost increases to Rs. 230 crore. The additional 

recurring cost that would be incurred in these facilities is about Rs. 20 crore each year. 

b. Reforming Subsidies and Transfers 

The desirability of subsidies arises primarily because of the associated positive 

externalities in the public provision of the concerned goods and services. Two important 

cases are health and education. Equity requires that the benefits of the subsidies should 

accrue primarily to the relatively deprived sections of the society, which in some contexts 

are the low income groups, and women or female children. The case becomes stronger 

when concerns about low incomes and gender are present simultaneously. In Tamil 

Nadu, direct subsidies were the third fastest growing revenue expenditure, next to 

pension and interest expenditure. The largest subsidy went to food (of which the rice 

subsidy accounts for 90 percent) distributed through the public distribution system, PDS. 

c. Reforming Public Sector Units 

State Level Public Enterprises continue to require financial support. State transport units, 

with about 120,000 employees have large accumulated losses. There are 18 cooperative 

spinning mills and 16 cooperative sugar mills, employing 20,000 people, which account 

for major financial losses incurred by the cooperative sector. There are also nine public 

Statutory Boards formed under independent legislative Acts, spanning from electricity to 

maritime transport to pollution control. The TNEB, accounting for 80 percent of 

employment of the nine Statutory Boards, has not been restructured yet. 

d. Gender Focus through Budgets 

Like the central government, in the Tamil Nadu state budget special statements 

indicating the extent of gender-oriented expenditure should be undertaken. 

e. Strengthening Local Governance 

Decentralization is generally considered efficiency augmenting. The provision of local 

public goods (LPGs) is best handled in a decentralised way. The efficiency advantages of 

decentralisation of LPGs are varied and quite significant. The first advantage of 

decentralisation is the possibility of having regional specific demands in the mix and level 

of local public goods, which can greatly enhance social welfare. Research has indicated 

that preference revelation problems encountered in public finance are greatly diminished 

as the size and heterogeneity of the population decreases. With decentralisation, 

competition, proximity, and transparency provide a strong motivation for local 

governments to be more responsive to the desires of the public. 

64

f. Pension and Salary Expenditures 

Among important initiatives, Government of Tamil Nadu has already carried out pension 

reform to reduce current and contingent pension liabilities. A defined contribution 

system for employees hired after April 1, 2003, has been introduced and the qualifying 

tenure of service required to receive full pensions has been increased by three years. 

Further, the basis for calculating eligible pensions was changed to the last 10 months 

average pay rather than the last drawn pay. Tamil Nadu has the highest number of civil 

servants per hundred people of any major Indian state after Punjab: 2.13 compared with 

1.4 for the country as a whole. Tamil Nadu had about 7 lakh government employees 

according to data given in Twelfth Finance Commission Report which is almost as many 

employees as in Uttar Pradesh, which has a much larger population. There will be a 

significant fiscal impact of implementation of the Sixth Pay Commission 

recommendations. 

g. Augmenting Capital Expenditures 

State government has a critical role to play in developing physical infrastructure in 

sectors like roads, power and irrigation. It is investment in these sectors that will 

strengthen growth and attract investment from outside. With higher growth, the 

revenues accruing to the government will also increase. Further, expenditure has to be 

restructured such that capital expenditure is increased with focus on infrastructure, and 

revenue expenditure has to be increased in social sectors like health and education. 

3.5 Suggested Fiscal Restructuring 

We draw out a plan for fiscal restructuring to demonstrate that considerable scope exists 

for creating additional fiscal space for augmenting expenditures on education and health, 

while keeping within the contours of the Fiscal Responsibility and Budget Management 

Act of Tamil Nadu. Using 2007-08 revised estimates as base numbers for the revenue 

items and using 2008-09 BE for most expenditure items, it is shown that within a set of 

reasonable assumptions, considerable fiscal restructuring can be undertaken to 

strengthen health and education as well as other social services for achieving the MDGs. 

The main assumptions are that in the current year (2008-09), nominal growth rates will 

be as high as 16 percent due to the higher inflation rate currently being experienced in 

India as well as in the states. This implies that if we take a combination of 7 to 7.5 

percent of real growth and 9 percent plus inflation, a nominal growth of 16 percent quite 

likely. However, it is expected that inflation will be moderated in 2009-10, and we take 

15 percent growth rate in nominal terms 2009-10 onwards. Own tax revenue buoyancy 

is taken at 1.1 which involves only a marginal increase in the tax-GSDP ratio over time. It 

65

may be noted that even with the introduction of VAT, given the high petroleum prices 

and since these are subjected to special rates within the structure of state VAT, it is likely 

that the state government will achieve its revenue rising targets. 

Table 3.7: Tamil Nadu Finances in the Medium Term: Projections 2007-08 to 

2014-15 

(Percent to GSDP) 

Fiscal Indicators 2007-08 RE 2008-09 (PR) 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 

Own Tax Revenues 10.11 10.11 10.24 10.38 10.52 10.66 10.81 10.95 

Own Non-tax Revenues 1.04 1.04 1.04 1.04 1.04 1.04 1.04 1.04 

State's Own Revenue 11.15 11.15 11.28 11.42 11.56 11.70 11.84 11.99 

Total Central Transfers 4.93 4.97 5.01 5.04 5.06 5.08 5.07 5.07 

Share in Taxes and Duties 2.79 2.83 2.86 2.90 2.93 2.95 2.96 2.98 

Grants 2.14 2.14 2.14 2.14 2.13 2.12 2.11 2.09 

Total 16.08 16.12 16.29 16.46 16.62 16.77 16.92 17.06 

Revenue Receipts 

Interest payments 2.13 1.78 1.86 1.87 1.86 1.86 1.85 1.84 

Pensions 2.32 2.36 2.26 2.16 2.06 1.96 1.86 1.76 

Other General Services 1.60 1.60 1.50 1.41 1.32 1.23 1.15 1.07 

Total General Services 6.05 5.74 5.62 5.44 5.24 5.05 4.85 4.67 

Education 2.56 2.74 3.34 3.63 3.93 4.25 4.58 4.93 

Medical and Public Health 0.66 0.71 0.86 0.93 1.01 1.09 1.18 1.27 

Other Social Services 2.63 2.40 2.34 2.28 2.21 2.14 2.07 2.00 

Total Social Services 5.85 5.85 6.53 6.84 7.14 7.48 7.82 8.20 

Economic Services 2.72 2.67 2.65 2.63 2.59 2.56 2.52 2.47 

Grants-in-aid and 

1.15 1.07 1.06 1.05 1.04 1.02 1.01 0.99 

Contributions 

Total 15.77 15.33 15.87 15.95 16.01 16.12 16.20 16.33 

Revenue Expenditure 

Revenue Surplus 0.32 0.79 0.43 0.51 0.60 0.66 0.72 0.73 

Fiscal Deficit 2.56 2.92 3.00 3.00 3.00 3.00 3.00 3.00 

Primary Deficit 0.44 1.14 1.14 1.13 1.14 1.14 1.15 1.16 

Non-debt Capital Receipts 0.85 0.87 0.83 0.79 0.76 0.72 0.68 0.65 

Capital Receipts 3.42 3.79 3.83 3.79 3.76 3.72 3.68 3.65 

Capital Expenditure 2.88 2.94 4.25 4.30 4.36 4.38 4.40 4.38 

Total Expenditure 18.65 18.27 20.12 20.26 20.37 20.49 20.60 20.71 

Outstanding Liabilities 22.73 22.52 22.58 22.63 22.60 22.56 22.45 22.36 

Source (Basic Data): State Budget Documents. 

It is shown in Table 3.7 that education and health expenditures can be increased 

progressively such that by 2014-15, the share of expenditure on education as percentage 

of GSDP would have increased to a level close to 5 percent and expenditure on health 

would have increased to nearly 1.3 percent of GSDP. In order to provide for the salary 

increases in the wake of the recommendations of the Sixth Pay Commission for education 

and health sectors which are highly salary intensive sectors we have provided for 

substantial step up in 2008-09 and 2009-10 in the growth rate of revenue expenditures. 

In 2008-09, for example in education the growth rate is about 25 percent and for 2009- 

66

10 it is kept at 40 percent to accommodate both salary increases and additional 

recruitment. 

It is possible to maintain surplus on revenue account, by maintaining fiscal 

deficit at a level of 3 percent and the ratio of outstanding liabilities relative to GSDP also 

remains just a little less than 23 percent. It is also possible to substantially increase 

capital expenditure as a percentage of GSDP to levels above 3 percent of GSDP. In other 

words, it is consistent with the FRBM Act to considerably increase investment in 

infrastructure as well as in health and education. Such fiscal restructuring will provide 

stimulus to achieving MDGs based poverty reduction within the framework of fiscal 

discipline. 

3.6 Other Fiscal Reforms: From VAT to GST 

For a better coverage of services at the state level, appropriate changes are required, to 

enable the states’ to share potentially large and growing tax base. Given the magnitude 

of the GSDP, such changes would be especially beneficial to the state economy. The 

Government of India, vide a constitutional amendment has placed taxation of services 

under Article 268A. The central and the state governments are now moving towards 

implementation of a comprehensive GST. This will help the state governments both in 

terms of real growth and more buoyant tax revenues. 

i. User Charges and Non-tax Revenues 

The state government particularly needs to look into the profile of user charges in 

relation to the costs of providing various general, social and economic services, 

particularly when the services are private in nature although publicly provided. Six areas 

need focused attention are education, health, agriculture, irrigation, power, and 

transport. 

ii. Subsidy Reforms 

Subsidy as a budgetary instrument of promoting social welfare has been overused, and 

sometimes abused, leading to inefficiencies. The cost of subsidies has generally been 

underestimated because most subsidies are hidden or implicit. In state budgets, only a 

very small fraction of subsidies is shown explicitly as subsidies. 

3.7 Monitoring Process of Reforms and Mid-course Corrections 

The progress of reforms needs to be monitored each year. As soon as deviations from 

the expected reform path are observed policy corrections should be introduced 

67

immediately. Fiscal slippage could be due to (i) external circumstances beyond the 

control of the state government, and (ii) inadequate reform measures. The state 

government has less control on the revenue side as it depends on external circumstances 

affecting the economy. If slippage on the revenue side is encountered, it should be 

counter-balanced by an adequate expenditure side correction. The expenditure side is 

largely under the control of the government except for interest payments and pensions. 

3.8 Summary 

Fiscal interventions are keys to achieving MDGs based poverty reduction targets. Tamil 

Nadu has been able to achieve the medium term fiscal responsibility targets. By 2008-09 

it has already achieved a fiscal deficit level relative to GSDP which is less than 3 percent 

and a surplus on its revenue account. The ratio of outstanding liabilities to GSDP is close 

to 23 percent and interest payment liabilities also compare favourably with many other 

states. With a view to achieving MGDs based poverty reduction targets, expenditure on 

infrastructure as well as that on health and education needs to be further strengthened. 

We have drawn up a fiscal restructuring plan for the period up to 2014-15 to show that, 

it is consistent with the FRBMA to create additional fiscal space for augmenting capital 

expenditure as well as expenditure on health and education. The following are the main 

features of the proposed fiscal restructuring process. 

1. The FRBM targets of maintaining surplus on revenue account and keeping fiscal 

deficit at or below 3 percent of GSDP has to be adhered to throughout the period up 

to 2014-15. However, it is not necessary to over-achieve the fiscal deficit target 

excessively by bringing fiscal deficit down much below 3 percent. 

2. Keeping fiscal deficit at 3 percent of GSDP, with some revenue account surplus, 

capital expenditure can be increased reasonably above 3 percent of GSDP. It is 

shown in the fiscal restructuring scenario that the capital expenditure to GSDP ratio 

can be increased to a level close to 4.6 percent of GSDP by 2014-15. This will not 

cause any appreciable increase in the debt-GSDP, which remains below 23 percent. 

3. On the revenue expenditure side even though there may be some pressure on 

pensions and salaries, interest payment relative to GSDP will steadily go down as 

growth of liabilities is kept in check. 

4. In combination with marginally buoyant revenues, expenditure on education and 

health can be increased from 2.56 and 0.66 percent of GSDP in 2007-08 to nearly 5 

percent in the case of education and a little less than 1.3 percent in the case of 

health. This will however necessitate some reduction in other social services as well 

as economic services. However, for a sustained broad based reduction of poverty, 

68

Government of Tamil Nadu has to substantially increase expenditure on education 

and health thereby bringing in about quantitative and qualitative strengthening of 

these services. 

5. Other components of fiscal structuring would include reforms in subsidies, continuous 

monitoring of non-tax revenues which has to be linked to increases in cost of 

providing services and preparation for implementation of GST. 

In the next Chapter we look at the spatial imbalances that exist within the state. The 

inter-district level inequalities in terms of human development index, gender related 

deficiencies, poverty profile and implementation of employment generation programmes 

are examined. 

69

70

Chapter 4 

COPING WITH SPATIAL IMBALANCES 

There are considerable inter-district differences in Tamil Nadu. With a view to dealing 

with spatial imbalances, it is important to develop a poverty reduction strategy (PRS) that 

takes into account imbalances in district level achievements. Further, a state level PRS 

should be complemented with a district level poverty-reduction strategy that takes into 

account block level difference in rural areas and also differences in the urban segments. 

In Tamil Nadu, in about 2/3 rd of the districts, the per capita income is below the per 

capita income of the state. The Worker Participation Rates are also unevenly distributed 

across the districts of Tamil Nadu. The low income districts have relatively lower Human 

Development Index (HDI) values, and income deficiency accounts for a larger weight in 

explaining the shortfall in HDI from the benchmarks, whereas education and health 

attainments are spatially better distributed. In this Chapter, we look at inter-district and 

intra-district deficiencies in selected districts in regard to key determinants of Millennium 

Development Goals (MDGs) including income, poverty education, health and genderrelated 

indicators. 

4.1 District Level Inequalities: Human Development Index 

Tamil Nadu presently has thirty districts (see Annexure 4.1 for details). These districts 

differ substantially in terms of their economic activities, educational and health 

achievements and other indicators reflecting the MDGs. Table 4.1 summarises the 

relative position of the thirty districts of Tamil Nadu in respect of the four components of 

the Human Development Index. 

As far as district level economic activities are concerned, as proxied by the per 

capita District Gross Domestic Product (PCDGDP), Chennai is the leading district and 

Villupuram is the poorest district. In terms of purchasing power parity, the real per capita 

DGDP for Tamil Nadu on an average is estimated to be 3363.11 (PPP$), based on the 

estimates prepared by the State Planning Commission. With reference to the other three 

determinants of the Human Development Index, i.e., life expectancy at birth (LEB), 

literacy rate (LR), and gross enrolment ratio (GER), the spread around the mean values is 

not as large as in the case of district income. 

71

Table 4.1: District Level Indicators: Human Development Index 

Sl. 

No 

Districts 

Life 

Expectancy 

at Birth 

Literacy 

Rate (LR) 

(2004-05) 

Gross 

Enrolment 

Ratio (GER) 

Real Per 

capita DGDP 

(2002-03) 

Human 

Development 

Index (HDI) 

(LEB) 2006 

2006 

PPP$ 

1 Chennai 84.80 86.35 85.36 5496.88 0.842 

2 Kanchipuram 76.50 83.63 86.78 4326.55 0.778 

3 Thiruvallur 75.50 82.47 86.01 4178.20 0.767 

4 Cuddallore 71.80 77.42 88.41 2478.36 0.709 

5 Villupuram 72.20 69.88 79.65 1801.20 0.667 

6 Vellore 71.40 78.73 82.17 2854.90 0.710 

7 Thiruvannamalai 71.60 73.51 79.48 2034.94 0.678 

8 Salem 74.00 70.81 88.32 3034.49 0.717 

9 Namakkal 69.80 72.90 96.32 3453.60 0.715 

10 Dharmapuri 69.80 63.82 82.88 2244.85 0.656 

11 Erode 73.10 70.59 86.38 3689.20 0.721 

12 Coimbatore 73.80 82.91 94.27 4741.27 0.775 

13 The Nilgiris 73.10 87.75 80.45 3218.70 0.745 

14 Tiruchirapalli 76.60 74.07 87.65 2919.00 0.737 

15 Karur 76.60 74.07 87.65 2919.00 0.737 

16 Perambalur 71.70 70.35 85.14 2890.54 0.697 

17 Thanjavur 71.90 81.97 84.17 2454.29 0.714 

18 Thiruvarur 72.70 82.86 85.09 2341.36 0.719 

19 Nagapattinam 74.70 82.85 87.19 2576.49 0.738 

20 Pudukkottai 72.00 77.21 85.62 2408.24 0.705 

21 Madurai 73.40 84.75 93.77 3467.72 0.759 

22 Theni 69.30 77.59 92.01 3991.90 0.726 

23 Dindigul 69.40 75.24 87.03 3300.16 0.705 

24 Ramanathapuram 69.60 78.71 84.38 2853.97 0.703 

25 Virudhunagar 69.40 79.98 88.46 4689.66 0.737 

26 Sivagangai 69.80 78.29 86.85 2616.29 0.701 

27 Thirunelveli 71.50 82.94 91.18 3383.02 0.740 

28 Thoothukudi 78.20 88.31 85.07 3928.26 0.791 

29 Kanniyakumari 72.60 94.94 90.31 2905.58 0.763 

30 Krishnagiri 71.90 63.82 80.74 2244.85 0.665 

Tamil Nadu 72.80 79.16 88.82 3363.11 0.736 

Source: Governmetn of Tamil Nadu (2007), Eleventh Five Year Plan 2007-2012, State Planning Commission. 

Notes: LEB- computed using the data of VES 2006, LR using NSS 61 st round and Census 2001 data. GER – 

computed using the data on school enrolment 2006-07 of school education department. Projected 

population 2006 is provided by DOES. Real PCGDDP – computed using the data on district wise per 

capita income 2002-03 and PPP$ value from Global HDR 2004. 

72

In order to focus on the deficient districts in respect of critical indicators of 

achievement, we need to focus on relative deficiencies. For this purpose, an index of 

relative deficiency can be used to highlight the spatial dimensions of needed priorities in 

designing a suitable strategy for MDGs based poverty reduction. 

Table 4.2 converts the data of Table 4.1 in terms of an index of deficiency for 

highlighting those districts which are the lowest in terms of the selected indicators as well 

as the extent by which they fall below the average value of the concerned indicators. 

This index is defined as follows: 

Index of Deficiency = (maximum - actual for a district) / average for Tamil Nadu 

Thus, for any indicator, I, the index is given by (I max - I i) / Ia 

where, I max = maximum index value among all districts, I i = the index value of the 

concerned district, and I a = average value for all districts. 

An index of deficiency is useful for augmenting allocation efficiency in various 

expenditures under different programmes where district-wise allocation is in the hands of 

the state government. It is expected that for efficiency gains, inter-district allocation of 

resources should bear a high positive correlation with the index of deficiency. The higher 

the deficiency the higher the index of deficiency for a district, the higher should be its 

allocation. Two general points are: efficiency gains are larger, if the spread in an index of 

deficiency around the average is larger when allocation of expenditures are aligned to the 

index of inter-district deficiency for specific indicators, and two, higher efficiency gains 

will result when different programmes addressing different needs (in respect of 

education, health, income, and gender) use specific indices of deficiency rather than 

using composite indices which have been weighted in some arbitrary manner. This is so 

because the order of districts with different indicators of deficiencies varies considerably 

across indicators. 

These indices are prepared for four indicators, life expectancy at birth, literacy 

rate, gross enrolment ratio, and real per capita gross district domestic product. Table 4.2 

gives the ten most deficient districts in respect of each of the four indicators. Appendix 

Table 4.1 provides similar information for all the districts. It can be observed that the 

range of variation relative to the average for the selected indicators is quite different. For 

example, in the case of PCGDDP the range varies from 0-110. In the case of GER, the 

range varies from 0-19. As such, the inter-district differences relative to the average are 

lowest for GER, LEB, followed by literacy rate. This indicates that while the government 

73

has been successful in spreading education and health services better across districts, 

wide differences remain in economic activities as reflected by the PCGDDP relative to the 

average. 

Life Expectancy at 

Birth (2006) 

Table 4.2: Index of Deficiency: HDI Components: Ten Most Deficient 

Districts 

Literacy Rate (2004- 

05) 

Gross Enroment Ratio 

(2006) 

Real Per capita GDDP 

(2002-03) PPP$ 

Theni 21.29 Dharmapuri 39.31 Thiruvannamalai 18.96 Villupuram 109.89 

Dindigul 21.15 Krishnagiri 39.31 Villupuram 18.77 Thiruvannamalai 102.94 

Virudhunagar 21.15 Villupuram 31.66 The Nilgiris 17.87 Dharmapuri 96.70 

Ramanathapuram 20.88 Perambalur 31.06 Krishnagiri 17.54 Krishnagiri 96.70 

Namakkal 20.60 Erode 30.76 Vellore 15.93 Thiruvarur 93.83 

Dharmapuri 20.60 Salem 30.48 Dharmapuri 15.13 Pudukkottai 91.84 

Sivagangai 20.60 Namakkal 27.84 Thanjavur 13.68 Thanjavur 90.47 

Vellore 18.41 Thiruvannamalai 27.07 Ramanathapuram 13.44 Cuddallore 89.75 

Thirunelveli 18.27 Tiruchirapalli 26.36 Thoothukudi 12.67 Nagapatinam 86.84 

Thiruvannamalai 18.13 Karur 26.36 Thiruvarur 12.64 Sivagangai 85.65 

Source: Based on Table 4.1. Details for all districts are shown in Appendix Table 4.1. 

Charts 4.1 to 4.4 show the districts in descending order of index of deficiency for 

these indicators. In Chart 4.1 relative deficiency in respect of achievement regarding life 

expectancy at birth is shown. There is a long stretch of the curve which is largely 

horizontal indicating that most districts are placed within the range of 15-20 percent 

deficiency relative to the average indicating greater uniformity across districts. 

Chart 4.1: Life Expectancy at Birth: Districts Arranged in Descending Order of 

Deficiency 

25.0 

20.0 

15.0 

10.0 

5.0 

0.0 

Theni 

Virudhunagar 

Namakkal 

Sivaganai 

Thirunelveli 

Perambalur 

Thanjavur 

Pudukkottai 

Kanniyakumar 

Tamil Nadu 

The Nilgiris 

Coimbatore 

Nagapatinam 

Kanchipuram 

Karur 

Chennai 

LEB at Birth (2006) 

74

Chart 4.2 indicates the arrangement of districts in descending order of deficiency 

in regard to the literacy rate. The most deficient districts in terms of literacy rate are 

Dharmapuri and Krishnagiri. There are several districts below the Tamil Nadu average. 

The better off districts are Kanniyakumari, Thoothukudi, The Nilgiris and Chennai. 

Chart 4.2: Literacy Rate: Districts Arranged in Descending Order of Deficiency 

45.0 

40.0 

35.0 

30.0 

25.0 

20.0 

15.0 

10.0 

5.0 

0.0 

Dharmapuri 

Villupuram 

Erode 

Namakkal 

Tiruchirapalli 

Dindigul 

Caddalore 

Sivaganai 

Vellore 

Virudhunagar 

Thiruvallur 

Thiruvarur 

Thirunelveli 

Madurai 

The Nilgiris 

Kanniyakumar 

Literacy Rate (2004-05) 

Chart 4.2 also shows that there is a steady decline from the highest to the lowest 

level of deficiency. This pattern is repeated in Chart 4.3, which shows all the Tamil Nadu 

districts in descending order of deficiency for Gross Enrolment Ratio. In the case of life 

expectancy at birth, the most deficient district is Theni followed by Dindigul. For GER, the 

most deficient worst districts are Thiruvannamalai followed by Villupuram. 

Chart 4.3: GER: Districts Arranged in Descending Order of Deficiency 

20.0 

18.0 

16.0 

14.0 

12.0 

10.0 

8.0 

6.0 

4.0 

2.0 

0.0 

Thiruvannamala 

The Nilgiris 

Vellore 

Thanjavur 

Thoothukudi 

Perambalur 

Pudukkottai 

Erode 

Sivaganai 

Nagapatinam 

Karur 

Caddalore 

Tamil Nadu 

Thirunelveli 

Madurai 

Namakkal 

GER 

75

In terms of per capita GDDP, the district placed at the bottom end is Villupuram, 

followed by Thiruvannamalai and Dharmapuri. In the case of the first two districts 

mentioned here, the PGDDP is less than half of that of Chennai, although these districts 

happen to be neighbouring districts (Chart 4.4). 

Chart 4.4 Real Per Capita GDDP: Districts Arranged in Descending Order of 

Deficiency 

120.0 

100.0 

80.0 

60.0 

40.0 

20.0 

0.0 

Villupuram 

Dharmapuri 

Thiruvarur 

Thanjavur 

Nagapatinam 

Ramanathapuram 

Perambalur 


Salem 

Dindigul 

Thirunelveli 

Madurai 

Thoothukudi 

Thiruvallur 

Virudhunagar 

Chennai 

Real Per capita GDDP (2002-03) PPP 

Considering the four indicators together, the district that needs priority attention 

as it appears in the ten most deficient districts for all the four indicators is 

Thiruvannamalai. Districts that appear in at least three of the ten most deficient districts 

among the four indicators are Villupuram, Dharmapuri, and Krishnagiri. Districts that 

appear in ten most deficient districts in at least two indicators are Thanjavur, Thiruvarur, 

Sivagangai, and Ramanathapuram. Thus, the maximum attention that has to be given 

for uplifting economic activities as well as income and health services should focus on 

districts like Thiruvannamalai, Villupuram, Krishnagiri, followed by Thanjavur, Thiruvarur, 

Sivagangai, and Ramanathapuram. In addition, there has to be service-wise 

differentiation in identifying the districts that are relatively more deficient. 

In terms of the overall Human Development Index, where all the four 

components are bought together, as indicated by Chart 4.5, the slope is on the whole 

relatively mild with a long horizontal stretch for a good number of districts indicating that 

leaving the districts that are located at high and low end of deficiency, for most of the 

middle range districts, the spread is relatively even. 

76

Chart 4.5: Human Development Index: Districts Arranged in Descending Order 

of Income 

30.0 

25.0 

20.0 

15.0 

10.0 

5.0 

0.0 

Dharmapuri 

Villupuram 

Perambalur 

Ramanathapuram 

Dindigul 

Vellore 

Namakkal 

Thiruvarur 

Theni 


Virudhunagar 

Thirunelveli 

Madurai 

Thiruvallur 

Kanchipuram 

Chennai 

HDI 

Thus, in terms of the components of human development as well as gender 

development, there are considerable differences in the ranking of districts in order of 

deficiency indicating that spatial focus of policies addressing education and health 

facilities as well as issues relating to gender development and economic activities in 

general need to be dovetailed towards the relatively more deficient districts in regard to 

the different indicators. Recently the Centre for Development Finance at Institute of 

Financial and Management Research (2009) constructed an Economic Environment Index 

(EEI) for Tamil Nadu. This study covers all the districts of Tamil Nadu, except Chennai 

and the three new districts (Ariyalur, Tiruppur and Krishnagiri) which formed part of their 

parent districts of Perambalur, Coimbatore and Dharmapuri. This is based on survey of 

both the firms and households. The EEI is based on seven sub-indices viz., (a) physical 

infrastructure, (b) social infrastructure, (c) governance, (d) law and order, (e) 

environmental sustainability, (f) business establishment cost, and (g) cost of oing 

business. Of the all the discticts ranked, the Nilgiris is ranked on the top, followed by 

Namakkal, Kanayakumari, Erode, Triuvarur, Coimbatore, Tiruchirappalli (16), Tirunelveli 

(17) and the last ranked district is Dindigul. 

4.2 Gender Related Deficiencies: District-wise Profile 

Next, we consider the district profile in terms of the Gender Development Index (GDI). 

Table 4.3 gives the inter-district profile of life expectancy at birth, literacy rate, gross 

enrolemnt ratio, and per capita income separately for the male and female population. 

77

Based on this, the gender development index (GDI) is derived. The districts are arranged 

in ascending order of GDI such that the lowest ranked state is listed first and the highest 

ranked state is listed at the end. Here also the worst off districts are Dharmapuri, 

Villupuram, Krishnagiri and Thiruvannamalai. 

Districts 

Table 4.3: Gender Development Index 

Life Expectancy at Birth Literacy Rate Gross Enrolment Ratio Per Capita Income (PPP$) GDI 

Male Female Male Female Male Female Male Female 

Rank 

Dharmapuri 68.5 71.1 73.6 53.5 85.1 80.4 3297.9 1124.8 0.640 30 

Villupuram 69.6 75.6 81.3 58.0 81.3 77.9 2706.4 2706.4 0.651 29 

Krishnagiri 68.3 76.6 75.0 53.5 80.8 80.7 3298.3 1124.9 0.654 28 

Thiruvannamalai 69.3 74.6 85.6 61.4 80.7 78.2 3075.1 990.5 0.662 27 

Perambalur 73.4 70.1 83.1 59.2 85.9 84.4 4391.3 1399.5 0.680 26 

Sivagangai 66.2 74.5 89.5 67.7 88.1 85.5 4038.7 1247.0 0.686 25 

Ramanathapuram 66.9 72.5 88.7 69.3 86.5 82.2 4401.0 1361.7 0.686 24 

Pudukkottai 70.9 73.2 89.0 66.4 86.8 84.4 3676.2 1160.4 0.688 23 

Dindigul 66.9 72.5 85.9 64.6 87.7 86.3 4965.5 1613.3 0.691 22 

Cuddallore 69.4 74.3 88.5 66.4 88.6 88.2 3727.9 1211.9 0.693 21 

Vellore 68.3 75.3 88.4 69.2 83.0 81.3 4319.1 1388.0 0.697 20 

Thanjavur 71.2 72.7 91.4 73.0 83.7 84.6 3757.0 1179.4 0.698 19 

Namakkal 67.8 72.1 83.4 62.1 97.5 95.0 5143.9 1705.9 0.700 18 

Thiruvarur 70.3 75.2 91.5 74.6 84.9 85.2 3571.3 1129.1 0.704 17 

Salem 70.2 78.7 80.5 60.6 87.6 89.2 4434.2 1529.4 0.706 16 

Erode 71.4 74.9 80.7 60.3 86.9 85.8 5510.0 1817.1 0.706 15 

Theni 67.0 71.9 88.2 66.9 94.5 89.3 5982.0 1959.5 0.711 14 

Tiruchirapalli 70.2 75.6 93.2 77.6 79.8 79.9 4508.8 1443.3 0.718 13 

Karur 74.8 78.9 86.0 62.5 88.6 86.7 4444.2 1410.2 0.721 12 

Nagapattinam 72.7 77.0 91.5 74.6 88.8 85.6 3931.6 1241.9 0.723 11 

Virudhunagar 66.8 73.0 90.5 69.9 90.1 86.8 7147.9 2263.1 0.724 10 

Thirunelveli 69.6 73.6 91.8 74.7 92.4 89.9 5233.0 1609.3 0.724 9 

The Nilgiris 68.6 78.3 95.8 80.0 80.9 80.0 4911.4 1551.6 0.731 8 

Madurai 69.6 78.4 93.2 76.2 94.1 93.5 5196.1 1702.4 0.747 7 

Kanniyakumari 70.8 74.5 97.2 93.1 90.5 90.1 4432.3 1401.0 0.749 6 

Thiruvallur 72.4 79.3 90.5 74.3 85.7 86.4 6239.2 2058.4 0.755 5 

Coimbatore 70.8 77.5 89.6 76.1 93.7 94.9 7050.6 2345.8 0.764 4 

Kanchipuram 74.0 79.4 90.7 76.5 85.3 88.4 6471.4 2127.8 0.765 3 

Thoothukudi 75.4 82.2 94.8 82.4 86.7 83.4 6101.2 1861.4 0.779 2 

Chennai 82.0 88.6 90.6 82.1 83.4 87.5 8148.7 2728.6 0.832 1 

Tamil Nadu 70.4 75.7 88.0 70.4 89.3 88.3 5063.0 1643.2 0.722 

Source: Government of Tamil Nadu (2007), Eleventh Five Year Plan, State Planning Commission. 

Note: Years for various indicators are the same as in Table 4.1. For details see the Eleventh Five Year Plan Document. 

In regard to the components of gender deficiency, as far as life expectancy at 

birth in concerned relative to the Tamil Nadu average, the lowest performing districts are 

Perambalur, Thanjavur, Pudukkottai and Dharmapuri. Perambalur is also the lowest as far 

as female literacy is concerned. For GER, Dharmapuri, Theni and Ramanathapuram are 

generally placed at the lower end in gender related indices. In respect of per capita 

income, female earnings are the lowest in Thoothukudi, Thirunelveli and Sivagangai. In 

respect of variation relative to the average, variation is least for GER, followed by life 

expectancy at birth and literacy (Table 4.4 and Appendix Table 4.2). 

78

Table 4.4: Index of Gender Deficiency: Ten Most Deficient Districts 

Life Index Literacy Index Enrolment Index Per capita Index 

Expectancy 

Rate 

Ratio 

Income 

Perambalur 88.82 Perambalur 89.05 Dharmapuri 95.55 Thoothukudi 94.01 

Thanjavur 94.96 Krishnagiri 89.17 Theni 95.57 Thirunelveli 94.76 

Pudukkottai 96.02 Villupuram 89.18 Ramanathapuram 96.11 Sivagangai 95.14 

Dharmapuri 96.53 Thiruvannamalai 89.66 Villupuram 96.90 Ramanathapuram 95.33 

Erode 97.56 Karur 90.84 Thoothukudi 97.28 Thanjavur 96.72 

Kanniyakumari 97.86 Dharmapuri 90.86 Virudhunagar 97.43 Pudukkottai 97.26 

Karur 98.10 Namakkal 93.08 Nagapattinam 97.49 Nagapattinam 97.33 

Thirunelveli 98.34 Pudukkottai 93.26 Thiruvannamalai 98.00 The Nilgiris 97.34 

Nagapattinam 98.50 Erode 93.40 Sivagangai 98.15 Kanniyakumari 97.39 

Namakkal 98.90 Cuddallore 93.79 Pudukkottai 98.34 Thiruvarur 97.41 

Source: Government of Tamil Nadu (2007), Eleventh Five Year Plan, State Planning Commission. 

Note: All districts are shown in Appendix Table 4.2. 

4.3 Selected Demographic Characteristics of Districts 

In order to meet the MDGs, the districts also need to be identified where the need is 

relatively more. We first look at demographic dimensions, which require a larger focus on 

the neediest districts. In Table 4.5, a ranking of districts in terms of percentage of 

population in the range of 0-6 years is given. The larger the percent of children, the 

lower is the ranking of the district in the index value, which is calculated in the context of 

an all India perspective. These data are based on a compilation of International Institute 

of Population Sciences (2006) (see Annexure 4.2 for methodology and definitions). 

Districts like Dharmapuri, Ariyalur, Pudukkottai, and Ramanathapuram have the largest 

number of young children. In regard to birth order of 3 and above, districts that show the 

highest percentage and therefore the lowest index values are Nagapattinam, Villupuram 

and Ariyalur. Data for all Tamil Nadu districts are given in Appendix Table 4.3. 

Table 4.5: Demography Related Disabilities: Ten Most Deficient Districts 

Districts 

% of Population 0-6 

% Index 

Population Value 

0-6 

Districts 

% of Birth order 3 and Above 

% of Birth Index Value 

Order 3+ 

Dharmapuri 12.9 0.609 Nagapattinam 36.6 0.599 

Ariyalur 12.3 0.644 Villupuram 35.9 0.611 

Pudukkottai 12.1 0.659 Ariyalur 35.8 0.612 

Ramanathapuram 12.0 0.663 Thoothukudi 35.3 0.621 

Villupuram 12.0 0.661 Vellore 35.3 0.621 

Cuddallore 11.9 0.669 Pudukkottai 34.8 0.629 

Perambalur 11.7 0.679 Ramanathapuram 34.5 0.633 

Vellore 11.7 0.677 Dharmapuri 34.4 0.635 

Nagapattinam 11.6 0.684 Thiruvannamalai 34.3 0.637 

Thiruvannamalai 11.5 0.693 Cuddallore 33.3 0.653 

Source: Ranking and mapping of districts, International Institute of Population Sciences (2006), Bombay. 

Note: All districts are shown in Appendix Table 4.3. 

79

Table 4.6 indicates relative positions of districts where demographic disabilities, 

specially related to women are higher. In terms of percentage of birth below the age of 

20, Dharmapuri, Salem and Theni show the highest incidence and therefore the lowest 

index value. Data for all the districts are given in Appendix Table 4.4. In regard to under 

5 mortality rate, eleven districts in Tamil Nadu have a rate higher than 90. In districts like 

Dharmapuri and Salem, the percentage of women giving birth to a child below the age of 

20 is close to 10 percent. 

Table 4.6: Demography Related Gender Disabilities 

Percent of Birth Below 

Percent of Under 5 Mortality 

Districts 

Age 20 

Districts 

Percent Births Index Value Under 5 Index Value 

below 20 

Mortality 

Dharmapuri 12.1 0.42790 Theni 105 0.71936 

Salem 10.4 0.51266 Virudhunagar 101 0.73757 

Theni 9.9 0.53606 Thoothukudi 99 0.74668 

Perambalur 8.1 0.63095 Madurai 98 0.75124 

Vellore 7.7 0.65105 Dindigul 95 0.7649 

Villupuram 7.1 0.67799 Villupuram 94 0.76944 

Cuddallore 6.5 0.71325 Coimbatore 93 0.77401 

Ariyalur 6.2 0.72355 Namakkal 93 0.77401 

Dindigul 6.1 0.73145 Thiruvannamalai 91 0.78311 

Thiruvallur 5.9 0.73901 Vellore 91 0.78311 


Note: Districts are based on 2001 Census. For all districts in Tamil Nadu, see Appendix Table 4.4. 

4.4 Health Services 

The primary health care and preventive health services in Tamil Nadu are delivered 

through 1417 primary health centres and 8683 health sub centres that are attached to 

the primary centres. At the secondary level, out patient and in-patient services are 

provided through district head quarters/ hospitals, 155 taluk hospitals, 80 non-taluk 

hospitals, and 11 government dispensaries apart from some mobile medical units and 

some specialised hospitals. 

a. Health Facilities: Inter-district Profile 

Table 4.7 relates to the position of health facilities for women in districts as percent of 

women receiving 3 or more Anti Natal Care (ANC) visits during pregnancy. Districts are 

arranged in descending order. Women receiving at least two Tetanus Toxide (TT) vaccine 

are also given alongwith the corresponding index value. The extent of coverage of full 

immunization indicates that the coverage has been in the range of 82.5 to 98.8 percent. 

The corresponding figures for all the 30 districts of Tamil Nadu are given as Appendix 

Table 4.5. 

80

Districts 

Table 4.7: Health Facilities for Women in Tamil Nadu Districts 

Women Receiving 3 

or More ANC Visits 

During Pregnancy 

% 

ANCs 

3+ 

Index Value Atleast 2 

TT 

Injections 

Women Receiving 

Atleast 2 TT 

Injections 

Index Value 

Complete 

Immunisation 

Coverage 

% Full 

Immunisation 

Index 

Value 

Dharmapuri 95.8 0.95515 75.2 0.73136 97.0 0.98146 

Ramanathapuram 97.2 0.97086 70.8 0.68203 88.6 0.89660 

Ariyalur 93.3 0.92904 84.2 0.83101 97.2 0.98346 

Villupuram 89.6 0.89046 89.2 0.88719 87.0 0.88094 

Thiruvannamalai 95.2 0.95566 61.8 0.58137 98.8 1.00000 

Perambalur 91.4 0.90879 95.1 0.95349 93.6 0.93739 

Pudukkottai 98.3 0.98182 58.9 0.54871 96.5 0.97709 

Salem 96.9 0.96701 96.8 0.97182 88.1 0.89158 

Vellore 96.5 0.96278 77.8 0.75952 92.4 0.93507 

Cuddallore 95.4 0.95092 92.9 0.92839 87.1 0.88184 



Table 4.8 highlights some of the health related issues for women in Tamil Nadu 

districts. Districts are arranged according to the composite index value. The lowest is 

Dharmapuri, Ramanathapuram, Ariyalur, Villupuram, Thiruvannamalai, Perambalur, 

Puddukkottai, Salem, Vellore and Cuddallore. Data for all districts are given in Appendix 

Table 4.6. 

Table 4.8: Health Indicators Relating to Women in Tamil Nadu Districts 

Immunisation Drop Out Contraceptive Composite 

Districts 

Prevalence Rate Index 

% Immunisation Index Value CPR Index Index Value 

Drop out 

Value 

Dharmapuri 2.4 0.98689 53.0 0.56081 0.67378 

Ramanathapuram 11.4 0.89169 49.4 0.51884 0.68112 

Ariyalur 2.1 0.99022 47.3 0.49439 0.69529 

Villupuram 10.9 0.89696 55.1 0.58479 0.69655 

Thiruvannamalai 1.2 1.00000 58.1 0.62018 0.70323 

Perambalur 6.5 0.94371 48.1 0.50340 0.70619 

Pudukkottai 3.5 0.97600 53.4 0.56506 0.70919 

Salem 11.9 0.88643 54.6 0.57872 0.72383 

Vellore 7.6 0.93199 55.7 0.59182 0.72538 

Cuddallore 12.9 0.87623 56.3 0.59882 0.73888 



81

. Access Costs 

A recent study by Dash, Acharya, Muraleedhran and Vaidyanathan (2008) has studied the 

efficiency and other features of the public health care system in Tamil Nadu. They 

observe that access to health facilities continues to be a major problem in various 

parts of Tamil Nadu. One useful indicator of the state of public health care facilities is 

the extent of population covered by each Primary Health Centre (PHC) and Health Sub 

Centre (HSC). The Government of India has laid down population based norms for 

establishing primary health centre and health sub centre: 30,000 persons per PHC and 

5000 per HSC in the plains; 20,000 persons per PHC and 3000 per HSC in hilly regions. 

For comparison in broad terms, however, Dash et. al. (2008) uses the same population 

norms across districts in each state. 

As per 2001 Census, several settlements/villages have no pubic health 

facilities within 10 km. It is shown that about 16 percent of villages in Tamil Nadu 

have no Public Health Centres (PHCs) within in a range of 10 km. In other words, 52 

percent of villages in the state have no PHCs within a 5 km range. The conditions 

vary from district to district. The districts of Dharmapuri, Villupuram, Sivagangai, 

Virudhunagar, Pudukkottai and Karur suffer more than other districts, with about 60 

percent of villages having no PHC within 5 kms. Thiruvarur, Nagapatinam and 

Thanjavur are the better-off districts, with nearly 60 percent of villages having a PHC 

within a 5 km range. They highlight the following features of Tamil Nadu health 

services: 

1. The rural-urban differences in Death Rate (DR) and Infant Mortality Rate (IMR) 

have substantially declined over the years. Although urban DR has been far below 

the rural DR, it has shown less consistent fall and in fact exhibited a rather 

disturbing trend by remaining more or less constant for a decade since 1993. 

2. The rural-urban differential in Birth Rate (BR) has fallen much more dramatically 

than DR and IMR over the same period. 

3. Since the mid-1990s until recent years (2003-06), the relative positions of rural and 

urban areas with regard to DR have remained more or less unchanged. 

4. The years 1984-90 witnessed a steep fall in BR and IMR. During the same period, 

neo-natal death rate hardly declined, and remained above 50, with rural areas 

showing a rate almost double that of urban areas. 

5. The under-5 mortality rate has also shown a steady decline from 189 (in 1971) 

to140 (in 1980) and further from 81 (in 1990) to about 50 in 2003. 

82

Regarding access costs in availing health services in Tamil Nadu the following 

points are highlighted: 

a. In Tamil Nadu, the out of pocket expenditure, or "direct medical expenditure", per 

visit for out patient (OP) care in a public facility was Rs 43, while it was Rs. 284 in 

private facility. It is noted that on an average, a rural patient spends 1.8 times per 

OP visit in public hospitals than his counterpart does in urban area (Rs.28). This 

difference is about 0.7 times in private facilities. 

b. Overall, the average out of pocket direct medical expenditure for OP care increases 

with economic status. This is true of both rural and urban areas. 

c. A rural patient visiting public facility on an average suffers a loss of income of Rs.80 

per visit, which is nearly twice the amount lost by his counterpart in urban areas. For 

those visiting private facility, the difference in loss of income between urban and 

rural areas is not as significant as in public facilities. 

d. As for inpatient care in Tamil Nadu, out of pocket direct medical expenditure per 

hospitalization in a private facility was Rs. 11,130, which was nearly ten times the 

amount (Rs.928) spent per hospitalization in a public facility. 

e. Direct medical expenditure per hospitalization in a public facility in urban area was 

2.4 times (Rs.1523) than that in rural area (Rs.633). Like-wise, the direct medical 

expenditure per hospitalization in a private facility in urban areas was 1.9 times 

(Rs.15995) than that in rural areas (Rs.8355). 

f. Overall, direct medical (out of pocket) expenditure per hospitalization increases with 

economic status, more perceptibly among those utilizing private facilities. On an 

average, loss of income due to hospitalization was around Rs.400 in Tamil Nadu, and 

did not show wide variations across rural/ urban and public/private facilities. As for 

indirect medical expenditure, public patients in rural areas on an average spent 

Rs.516 per hospitalization, compared to Rs. 338 by their counterparts in urban areas. 

In the private sector, patients from urban areas spent on an average Rs.774 towards 

indirect medical expenditure per hospitalization compared to Rs.588 by their counter 

parts in rural areas. 

These comparisons highlight the high access costs as well as the high private 

cost in seeking health services from public hospitals. 

c. Efficiency in Providing Health Services 

Dash et. al. (2008) also measure district-wise technical efficiency and scale efficiency 

using a data envelope analysis (DEA) for the public hospitals in Tamil Nadu. Of the 29 

83

districts, 16 (55 percent) were technically efficient as they had relative efficiency score of 

1.00 and, therefore, lie on the efficiency frontier (see Appendix 4.7 for details). The 

remaining 13 (45 percent) districts were technically inefficient with scores ranging from 

0.66 (Ramanathapuram district) to 0.98 (Dindigul district). These scores indicate that 

districts like Ramanathapuram and Dindigul could reduce their current inputs by 34 

percent and 2 percent, respectively, without altering the current level of output. 

However, this has to be qualified because the inefficiency of the districts like 

Ramanathapuram, Sivagangai or Nilgiris might be more due to some exogenous variables 

like poor infrastructure or socio economic factors or the hilly and geographic nature than 

the nature of the health care system. The average Technical Efficiency score among the 

inefficient districts was 85 percent, which means that the technically inefficient hospitals 

could reduce their resource use by 15 percent to maintain their current output levels. 

4.5 Safe Drinking Water 

Table 4.9 indicates availability of safe drinking water and percent of households 

connected with electricity. The availability of safe drinking water is lowest in 

Ramanathapuram, Kanniyakumari, Thiruvallur and the Nilgiris. Percent of households 

with least connectivity of electricity show that districts like Thiruvallur, Nagapattinam, 

Pudukkottai, and Ariyalur are the districts requiring highest attention. Corresponding data 

for all districts are given in Appendix Table 4.8. 

Table 4.9: Index of Districts with Safe Drinking Water and Electricity 

Connection 

Districts 

% Households using 

Safe Drinking Water Districts 

% Households 

Connected with 

Electricity 

% Households 

using Safe 

Drinking Water 

Index 

Value 

% 

Households 

Electrified 

Ramanathapuram 52.2 0.500 Thiruvarur 64.8 0.639 

Kanniyakumari 56.2 0.541 Nagapattinam 64.9 0.640 

Thiruvallur 70.4 0.691 Pudukkottai 65.0 0.641 

The Nilgiris 74.4 0.733 Ariyalur 65.7 0.649 

Sivagangai 75.6 0.746 Ramanathapuram 66.1 0.652 

Pudukkottai 78.7 0.778 Dindigul 69.1 0.683 

Dharmapuri 79.7 0.712 Dharmapuri 71.5 0.708 

Namakkal 80.6 0.798 Sivagangai 71.8 0.711 

Kanchipuram 81.2 0.804 Thanjavur 71.9 0.712 

Salem 82.1 0.813 The Nilgiris 73.0 0.723 


Note: Districts are based on 2001 Census. Data for all districts are given in Table 4.7. 

Index 

Value 

84

4.6 Incidence of Poverty: District Profile 

Census of households below poverty line (BPL) was launched in States and Union 

Territories in 1992. Data from BPL Census have been used variously by the Government 

for poverty alleviation programmes. The Expert Group for the purpose of BPL Census 

2002 has laid down the methodology for the identification of households below poverty 

line. At present BPL enumeration in the states is based on this. While BPL Census (2002) 

was an improvement over the 1997 BPL Census, it also suffers from some infirmities. 

Sundaram (2003) observes that three of the four criticisms of the 1997 BPL Census are 

equally applicable for the 2002 BPL Census. First, there is the absence of provision for 

inclusion of persons who became poor after finalisation of the BPL list. Second, the 

absence of poverty lines for all States and Union Territories comes back via the upper 

limit given by Planning Commission’s estimate of head count ratio. Third, adoption of 

‘uniform criteria for all the rural areas throughout the country’ is very much present 

through the newly prescribed centrally determined uniform list of thirteen indicators. The 

fourth criticism of exclusion of visibly non-poor does result in dropping of the exclusion 

criterion but at a cost of increasing the coverage of the census many fold. 

Many of the rural poverty alleviation programmes are administered on the basis 

of enumeration of the population below poverty line (BPL), which has been discussed 

earlier. The last such survey was taken in 2002. Based on this, if we look at the 

percentage of BPL population in a district to total rural population in that district (Table 

4.10), then the largest district poverty head count ratio is shown for Ramanathapuram at 

close to 60 percent followed by Madurai at 42.8 percent. Perambalur with a BPL head 

count ratio of 39.5 percent is third followed by Krishnagiri at 37 percent and Kanchipuram 

and Sivagangai at 35 percent each. 

Another way of looking at BPL population is to take the number of persons below 

poverty line in a district to total number of BPL persons in all districts in Tamil Nadu. This 

gives the share of BPL population in a district to total BPL population in all districts. A 

poverty alleviation programme needs to be directed towards those districts where the 

absolute numbers of poor are larger. The share of BPL population in total population 

indicates this kind of priority because it is the product of share of rural population of a 

district in total rural population in all districts and the share of head count ratio of BPL 

population in the total population of the concerned state. 

85

Districts 

Table 4.10: Percentage of BPL to Total Rural Population 

No. of 

Rural 

Families 

Rural 

Population 

No. of 

BPL 

Families 

BPL 

Population 

Percentage 

of BPL to 

Total Rural 

Population 

Coimbatore 542186 1731341 188888 566170 32.7 

Cuddallore 453252 1388568 145440 424646 30.6 

Dharmapuri 290659 1462935 93990 426962 29.2 

Dindigul 347787 988435 110915 292897 29.6 

Erode 453645 1558162 141221 427891 27.5 

Kanchipuram 405860 1291567 141008 452497 35.0 

Kanniyakumari 167176 365624 48467 102238 28.0 

Karur 176841 587905 72352 217729 37.0 

Krishnagiri 356976 1338806 115320 395523 29.5 

Madurai 303333 926571 139395 396574 42.8 

Nagapattinam 282648 898600 87284 266961 29.7 

Namakkal 307018 953257 96168 269567 28.3 

Perambalur 335647 920614 153554 364098 39.5 

Pudukkottai 335291 1455924 117378 459483 31.6 

Ramanathapuram 146369 527571 95205 314110 59.5 

Salem 559368 1899678 187251 546621 28.8 

Sivagangai 235303 912644 90344 319284 35.0 

Thanjavur 424442 1422628 149598 476529 33.5 

The Nilgiris 99887 276512 34758 80758 29.2 

Theni 158873 421007 51712 136574 32.4 

Tiruchirapalli 362222 1391399 120996 427266 30.7 

Thirunelveli 421700 1148640 158050 374054 32.6 

Thiruvallur 371075 1427110 130718 456586 32.0 

Thiruvannamalai 472173 1971075 152486 586845 29.8 

Thiruvarur 277664 870266 103244 286633 32.9 

Tuticorin 288396 1047585 94056 310329 29.6 

Vellore 594028 2598878 200925 810725 31.2 

Villupuram 563285 1925205 198098 663435 34.5 

Virudhunagar 399392 1312203 113733 374693 28.6 

Total 10132496 35020710 3532554 11227678 32.1 

Source: Ministry of Rural Development, Government of India and Government of Tamil Nadu. 

In other words, the share of BPL population in total population will be higher, the 

higher is the size of the village in terms of total population and the higher is the head 

count ratio of BPL population in that village. As such, Vellore is the most disadvantaged 

86

district followed by Villupuram and Thiruvannamalai. The next two districts in the share 

of BPL population are Coimbatore and Salem (Table 4.11). 

Table 4.11: Share of BPL Population in Total BPL Population 

Districts 

Rural 

Population 

BPL 

Population 

87 

Share of Rural 

Population in 

Total Rural 

Population 

Share of BPL 

Population in 

Total BPL 

Population 

Vellore 2598878 810725 7.42 7.22 

Villupuram 1925205 663435 5.50 5.91 

Thiruvannamalai 1971075 586845 5.63 5.23 

Coimbatore 1731341 566170 4.94 5.04 

Salem 1899678 546621 5.42 4.87 

Thanjavur 1422628 476529 4.06 4.24 

Pudukkottai 1455924 459483 4.16 4.09 

Tiruvallur 1427110 456586 4.08 4.07 

Kanchipuram 1291567 452497 3.69 4.03 

Erode 1558162 427891 4.45 3.81 

Tiruchirapalli 1391399 427266 3.97 3.81 

Dharmapuri 1462935 426962 4.18 3.80 

Cuddallore 1388568 424646 3.96 3.78 

Madurai 926571 396574 2.65 3.53 

Krishnagiri 1338806 395523 3.82 3.52 

Virudhunagar 1312203 374693 3.75 3.34 

Thirunelveli 1148640 374054 3.28 3.33 

Perambalur 920614 364098 2.63 3.24 

Sivagangai 912644 319284 2.61 2.84 

Ramanathapuram 527571 314110 1.51 2.80 

Tuticorin 1047585 310329 2.99 2.76 

Dindigul 988435 292897 2.82 2.61 

Thiruvarur 870266 286633 2.49 2.55 

Namakkal 953257 269567 2.72 2.40 

Nagapattinam 898600 266961 2.57 2.38 

Karur 587905 217729 1.68 1.94 

Theni 421007 136574 1.20 1.22 

Kanniyakumari 365624 102238 1.04 0.91 

The Nilgiris 276512 80758 0.79 0.72 

Total 35020710 11227678 100.00 100.00 


There are specific disadvantaged groups within the BPL population such as SC, 

ST and OBCs as also the landless. In Coimbatore for example nearly 11 percent of the

BPL population belongs to SC category and nearly 14.5 percent belong to OBCs (Table 

4.12). This is another kind of targeting tool that can be made use of when targeting is to 

be done within a district. 

Table 4.12: District-wise Share of Selected Groups in BPL Population (2002) 

(Percent) 

Districts 

BPL Details 

SC ST OBC Others Landless IAY - 

Landless 

Coimbatore 10.99 0.92 14.45 7.00 28.46 29.40 

Cuddallore 15.84 0.38 15.45 2.40 29.12 24.80 

Dharmapuri 5.16 1.05 8.65 3.81 15.54 16.34 

Dindigul 10.82 0.30 19.26 7.22 30.54 32.78 

Erode 11.84 0.82 18.07 2.21 28.90 26.12 

Kanchipuram 14.90 1.11 11.10 3.67 26.64 18.07 

Kanniyakumari 3.23 0.54 28.79 14.00 33.08 38.20 

Karur 10.97 0.13 17.54 4.43 25.47 25.78 

Krishnagiri 6.23 1.63 11.24 7.75 20.61 27.10 

Madurai 12.88 0.11 14.30 7.81 31.55 30.33 

Nagapattinam 16.03 0.99 13.64 2.03 26.41 22.45 

Namakkal 13.52 1.72 17.44 2.71 26.04 28.14 

Perambalur 12.34 0.71 18.00 10.76 27.43 31.18 

Pudukkottai 8.19 0.00 8.37 8.98 15.57 12.72 


Salem 7.68 2.01 21.39 2.93 25.12 27.70 

Sivagangai 7.92 0.02 16.56 3.72 19.07 18.02 

Thanjavur 10.22 0.28 13.74 6.88 28.23 23.27 

The Nilgiris 9.08 4.53 11.50 15.18 35.65 41.34 

Theni 11.11 0.30 19.55 6.91 37.86 27.07 

Tiruchirapalli 8.37 0.28 12.36 7.31 21.48 20.91 

Thirunelveli 12.95 0.30 21.75 6.94 35.43 35.77 

Thiruvallur 12.43 1.86 10.81 3.53 20.59 16.52 


Thiruvarur 18.63 0.10 12.10 5.04 30.50 25.89 

Tuticorin 10.74 0.07 12.12 7.37 26.02 24.78 

Vellore 8.00 1.18 13.02 2.58 20.53 18.26 

Villupuram 10.80 1.45 14.93 2.56 19.79 21.14 

Virudhunagar 9.81 0.00 12.05 8.50 24.86 28.39 

Total 10.47 0.86 14.46 5.31 24.46 23.79 


4.7 Implementation of NREGA 

The National Rural Employment Guarantee Act (NREGA) provides a legal guarantee for 

one hundred days of employment in every financial year to adult members of any rural 

88

household willing to do public work-related unskilled manual work at the statutory 

minimum wage. This Act was introduced with an aim of improving the purchasing power 

of the rural people, primarily semi or un-skilled work to people living below poverty line in 

rural India. It attempts to bridge the gap between the rich and poor in the country. 

Roughly one-third of the stipulated work force must be women. Central Government 

meets the cost towards the payment of wage, 3/4 of material cost and certain 

percentage of administrative cost. State Government meets the cost towards 

unemployment allowance, 1/4 of material cost and administrative cost of the state 

council. 

Adult members of rural households submit their name, age and address with 

photo to the Gram Panchayat. The Gram Panchayat registers households after making 

enquiry and issues a job card. The job card contains the details of adult member enrolled 

and his /her photo. Registered person can submit an application for work in writing (for 

at least fourteen days of continuous work) either to panchayat or to Programme Officer. 

The panchayat/programme officer accepts valid applications and issue date of receipt of 

application. A letter providing work is sent to the applicant, which is displayed at the 

panchayat office. The employment is provided within a radius of 5 km. If it is above 5 

km, extra wages are paid. If employment under the scheme is not provided within fifteen 

days of receipt of the application, daily unemployment allowance is to be paid to the 

applicant. 

NREGA is the first programme, which has been implemented with full Information 

Technology (IT) support. TATA Consultancy Services, India's largest IT/ITES sector 

company has designed the software solution for the state of Andhra Pradesh. NIC has 

developed solutions for other areas. 

The National Rural Employment Guarantee Act has been implemented in Tamil 

Nadu districts in three phases. The NREGA ensures that 100 days of work per rural 

household per year is guaranteed upon demand. The scheme is therefore entirely selftargeting 

in principle, and follows a right- based approach. Employment must be within 5 

km of the applicant's residence or there is a 10 percent premium on the scheme wage. 

In implementing NREGA, the Central government bears around 90 percent of 

total scheme costs, i.e. all wage costs and three quarters of the non-wage component 

(including materials and most administration), working on an assumed 60/40 labour and 

capital split. However, if a state fails to provide work for a household within 15 days, it is 

89

obliged to pay from its own resources an unemployment allowance, at a rate not less 

than 1/4 of the scheme wage rate for the first month and 1/2 thereafter - up to the 100 

day limit for the household. 

Up to end July 2008, total employment provided under NREGA in Tamil Nadu 

added to 419.2 lakh person days giving employment to 18.69 lakh households, that is, 

22.43 person days per households since the inception of the programme. Among 

different groups benefiting from the programme, the largest was that of women whose 

share in benefit was to the extent of nearly 75.6 percent. Total fund available for the 

programme was Rs.1015.68 crore out of which actual expenditure was only Rs. 338.57 

crore. This amounts to only about one-third of the total fund available. 

Table 4.13 summarises the implementation of NREGA in Tamil Nadu up to July 

2008. It may be noted that the coefficient of correlation between the share of BPL 

population in a district in total BPL population of all districts in Tamil Nadu and the share 

of cumulative number of days of employment under NREGA in a district in the 

corresponding number in all districts (relevant data in Appendix Table 4.9) is extremely 

low at 0.26. This may be partly due to the choice of districts in the phasing sequence of 

NREGA and partly due to mismatches in incidence of the programme and the incidence of 

the poverty according to BPL population. 

4.8 Intra-district Imbalances: Selected Districts 

As part of the overall poverty reducing strategy plan (PRSP), it will be useful to examine 

the strategy for preparing District level PRSP taking some of the relatively backward 

districts in Tamil Nadu as case studies. One district is discussed here, viz., 

Thiruvannamalai. Similar details for Sivagangai are given in Annexure 4.3. 

90

Districts 

Table 4.13: Implementation of NREGA in Tamil Nadu Up to July 2008 

Cumulative 

No. of HH 

Issued Job 

Cards 

Cumulative No. 

of HH 

Demanded 

Employment 

Cumulative No. 

of HH Provided 

Employment 

Cumulative 

Person-days 

Generated (in 

lakh) 

Phase I 

Cuddallore 288130 123541 123541 49.98 

Dindigul 207840 91407 91407 27.71 

Nagapattinam 179484 55065 55065 44.44 

Sivagangai 184278 38990 38990 25.08 

Thiruvannamalai 344693 83967 83967 34.81 

Villupuram 400309 201049 201049 83.15 

Sub Total 1604734 594019 594019 265.16 

Phase II 

Karur 106337 36022 36022 8.29 

Thanjavur 159953 61047 61047 18.93 

Thirunelveli 223450 97228 97228 17.95 

Thiruvarur 163191 90683 90683 29.15 

Sub Total 652931 284980 284980 74.32 

Phase III 

Ariyalur 69339 46568 46568 4.03 

Coimbatore 181685 33872 33872 0.75 

Dharmapuri 61602 16231 16231 2.21 

Erode 119003 13293 13293 2.39 

Kanchipuram 240096 32881 32881 5.65 

Kanniyakumari 47166 4706 4200 0.55 

Krishnagiri 89646 38562 38562 1.21 

Madurai 106765 29664 29664 5.63 

Namakkal 143206 81920 30763 1.59 

Perambalur 41279 16953 16953 1.99 

Pudukkottai 223259 127491 127491 6.36 

Ramanathapuram 130705 79697 79697 7.18 

Salem 150801 47830 47830 2.69 

The Nilgiris 5072 2988 2988 0.28 

Theni 34203 10277 10277 1.01 

Thiruvallur 69528 100935 100935 8.07 

Thoothukudi 

(Tuticorin) 80780 26658 26658 14.40 

Tiruchirapalli 44231 30729 30729 3.13 

Vellore 229330 272924 272924 6.91 

Virudhunagar 35438 27655 27655 3.70 

Sub Total 2103134 1041834 990171 79.74 

Total 4360799 1920833 1869170 419.22 


91

The District level PRSP should particularly take into account agricultural 

productivity, livelihood options, intra-district disparities in health, education, and 

household incomes, and food security among other issues. A district level PRSP needs to 

identify the basic economic activities of the districts, some indicator (like that of BPL 

population) of the poor in the district according to blocks/urban segments, and block wise 

examination of participation rates in educational and health services for rural areas. 

Similarly, some indicators of work participation rate or employment opportunities can 

help developing a block level targeting and policy intervention perspective. It is possible 

to obtain detailed block level data on literacy and educational institutions and number of 

students, various health indicators, and gender related indicators particularly on health. 

These data can be used to formulate a suitable district level poverty reduction strategy. 

a. Thiruvannamalai 

Thiruvannamalai is situated 185 km from Chennai and 210 km from Bangalore. As per 

2001 Census, Thiruvannamalai had a population of 130301. Males constitute 51 percent 

of the population and females 49 percent. Thiruvannamalai has an average literacy rate 

of 74 percent, which is higher than the national average of 59.5 percent: male literacy is 

81 percent, and female literacy is 68 percent. In Thiruvannamalai, 11 percent of the 

population is under 6 years of age. 

a1. Income and Employment in Thiruvannamalai 

In Thiruvannamalai, the share of primary sector has been larger than that of Tamil Nadu 

although this share has been coming down. Based on 1993-94 price data, the share of 

primary sector fell from 43.7 percent in 1993-94 to 31.5 percent in 2001-02. The share of 

secondary sector has more or less remained stagnant after the mid-nineties but that of 

the tertiary sector has increased. In terms of population living below the poverty line, 

Thiruvannamalai fares much worse than of Tamil Nadu as a whole. Thiruvannamalai 

district has 18 blocks. Out of these, 13 blocks have both urban and rural areas. The 

block-wise distribution of BPL population in rural areas is summarised in Table 4.14. 

Blocks are arranged in descending order of BPL head count ratio. 

92

Table 4.14: Share of BPL Population in Total Rural Population: 

Thiruvannamalai 

Blocks 

No. of 

Rural 

Families 

Rural 

Population 

No. of 

BPL 

Families 

BPL 

Population 

Percentage 

of BPL to 

Total Rural 

Population 

Anakkavur 18723 78697 5780 24138 30.67 

Arani 26910 115316 8729 33490 29.04 

Chengam 32231 138692 9597 39691 28.62 

Chetput 22743 77843 7361 23997 30.83 

Cheyyar 23045 90813 7253 25998 28.63 

Jawathu Hills 13172 55103 6939 28336 51.42 

Kalasapakkam 29442 120710 9427 34734 28.77 

Keelpennathur 25642 109097 8147 32484 29.78 

Pernamallur 22017 86585 6795 23764 27.45 

Polur 31012 129385 10314 39235 30.32 

Pudupalayam 18116 76207 6502 25200 33.07 

Thandrampet 35962 164891 11674 49845 30.23 

Thellar 25047 103242 7722 29118 28.20 

Thurinjapuram 31219 125010 8481 31114 24.89 

Thiruvannamalai 37577 161644 13025 52504 32.48 

Vandavasi 27840 117500 8026 29934 25.48 

Vembakkam 28844 122621 10027 37094 30.25 

West Arani 22631 97719 6687 26169 26.78 

Total 472173 1971075 152486 586845 29.77 

Source: Thiruvannamalai Human Development Report 2006. 

a2. Education Indicators in Thiruvannamalai 

Table 4.15 gives block wise literacy rate for rural areas in Thiruvannamalai and for the 

total of rural and urban areas. Blocks are arranged in ascending order of literacy. Based 

on this, two indices of deficiency separately for rural and urban areas are developed 

relative to the average as given in Appendix Table 4.10. There are considerable interblock 

differences in the literacy rate. In some blocks, literacy rate for the total population 

is as low as 38 percent (Jawadhu Hills). In this block, female literacy is only 26.2 percent. 

These figures pertain to Census 2001. For the district as a whole, urban literacy is higher 

than rural literacy and male literacy is higher than female literacy. The over all literacy 

rate is 67.4 percent. The highest literacy rate is for Thiruvannamalai and Arni Blocks. It is 

clear that there is considerable deficiency in the reach of literacy in the district as a whole 

but within the district several blocks have extremely low level of achievement. 

93

Table 4.15: Block-wise Literacy Rate in Thiruvannamalai 

(Percent) 

Blocks 

Rural 

Total (Urban and Rural) 

Male Female Total Male Female Total 

Jawadhu Hills 49.51 26.22 38.17 49.51 26.22 38.17 

Thandrampet 69.37 46.00 57.82 69.37 46.00 57.82 

Pudupalayam 71.64 46.88 59.34 72.57 48.25 60.45 

Chengam 70.37 48.37 59.52 72.04 50.99 61.64 

Kalasapakkam 76.20 49.17 62.70 76.20 49.17 62.70 

Thurinjapuram 77.54 51.48 64.55 77.54 51.48 64.55 

Annakavur 79.95 53.71 66.83 79.95 53.71 66.83 

Pernamallur 80.96 53.23 66.92 81.42 53.87 67.46 

Thellar 79.77 54.06 66.98 80.13 54.69 67.47 

Vembakkam 81.23 54.61 67.93 81.25 54.66 67.96 

Chetpet 79.71 52.13 65.75 81.02 55.22 67.96 

Kilpennathur 79.16 54.50 66.65 80.36 56.78 68.42 

Polur 80.40 55.22 67.74 82.28 58.19 70.15 

Vanadavasi 79.09 54.99 67.11 81.64 59.89 70.75 

Cheyyar 79.19 53.58 66.34 82.44 59.37 70.85 

West Arni 82.48 57.58 69.93 83.33 58.97 71.04 

Tiruvannamalai 77.77 54.18 65.98 83.7 64.31 74.05 

Arni 83.36 58.64 70.96 85.34 63.62 74.42 

District 77.15 52.14 64.65 79.17 56.63 67.39 

Source: Census of India, 2001. 

Table 4.16 provides block wise gross access ratio for primary and upper primary 

schools in Thiruvannamalai district. The gross access ratio is calculated by dividing 

number of habitations shared by school with a radius of 1 km by the number of 

habitations. In the case of upper primary schools, the reference is to a radius of 3 kms 

rather than 1 km. Blocks are arranged in ascending order of gross access ratio (GAS) for 

2003-04 for primary schools. It will be noted that the GAS for primary schools ranges 

from 93.6 to 100 percent. In ten out of 18 blocks, 100 percent access ratio has already 

been achieved. In the case of upper primary schools 100 percent access rate has been 

achieved in 11 blocks. This implies that a little less than half of the blocks in 

Thiruvannamalai require additional school at the primary/upper primary levels for 

providing access to education to every eligible child within a radius of 1 km and 3 kms for 

the two levels of schools, respectively. 

94

Table 4.16: Block -wise Gross Access Ratio of Schools 

Blocks Primary Upper Primary 

2002-03 2003-04 2002-03 2003-04 

Thurinjapuram 91.91 93.62 97.87 97.87 

Thandrampet 95.00 95.00 100.00 100.00 

Polur 96.36 96.36 98.91 98.91 

Chengam 96.05 96.71 100.00 100.00 

Jawadhu Hills 97.20 97.24 100.00 100.00 

Cheyyar 98.44 98.44 97.92 97.92 

Kilpennathur 98.10 98.57 100.00 100.00 

Tiruvannamalai 98.54 99.51 97.09 97.09 

Vembakkam 99.48 100.00 99.48 100.00 

Annakavur 100.00 100.00 99.03 99.03 

Pernamallur 100.00 100.00 100.00 100.00 

Vanadavasi 100.00 100.00 96.43 96.43 

Thellar 100.00 100.00 100.00 100.00 

Arni 100.00 100.00 100.00 100.00 

West Arni 100.00 100.00 100.00 100.00 

Kalasapakkam 100.00 100.00 100.00 100.00 

Chetpet 100.00 100.00 99.17 99.17 

Pudupalayam 100.00 100.00 100.00 100.00 

District 98.07 98.36 99.21 99.24 

Source: Thiruvannamalai Human Development Report 2006. 

Table 4.17 gives the transition rates for rural blocks and urban areas in 

Thiruvannamalai for 2005-06. The transition rates for primary education (standard 5 to 6) 

range from 91 to nearly 99 percent. In the case of upper primary education, the 

transition rates vary from 84.2 to 98.3 percent. The lowest performance is for Jawadhu 

Hills and the better performing blocks are Vembakkam and Polur. These transition rates 

need to be brought closer to 100 percent. Improvement in quality and examination of 

factors that lead to students not transiting to higher classes in school education requires 

further attention in Thiruvannamalai. 

While direct information on quality of education at the school level in 

Thiruvannamalai is not available, there is some information on availability of 

infrastructure facilities in the schools. In the primary schools, 68.4 percent of the schools 

are without head masters room, 36.5 percent are without toilets, 76.2 percent are 

without girls toilets, 89.1 percent are without access rams, and 37.2 percent are without 

95

play grounds. Clearly, much more infrastructural investment needs to be done for 

primary and upper primary schools in Thiruvannamalai. 

Table 4.17: Block-wise Transition Rates: 2005-06 

Primary 

Upper Primary 

Blocks 

Boys Girls Total Boys Girls Total 

Jawadhu Hills 89.4 93.1 91.0 91.7 89.5 84.2 

Pudupalayam 97.2 94.8 96.0 94.7 96.7 95.7 

Pernamallur 94.5 99.0 96.8 98.0 96.8 97.5 

Annakavur 97.9 97.0 97.5 89.3 87.5 88.5 

Kilpennathur 97.2 98.4 97.8 96.9 96.2 96.6 

Chengam 98.6 97.4 98.0 94.2 96.3 95.2 

Kalasapakkam 97.6 98.6 98.1 98.1 97.6 97.9 

Thurinjapuram 98.1 98.3 98.2 97.8 98.0 97.9 

West Arni 98.6 97.9 98.3 97.8 97.0 97.4 

Thandrampet 97.5 98.1 98.3 92.9 98.1 95.5 

Chetpet 98.3 98.5 98.4 98.5 97.6 98.2 

Arni 98.1 98.8 98.4 99.0 99.1 99.1 

Cheyyar 98.5 98.3 98.4 91.4 95.8 94.0 

Tiruvannamalai 98.5 98.5 98.5 92.8 97.8 65.0 

Thellar 98.7 98.7 98.7 97.5 97.4 97.5 

Vanadavasi 98.4 99.1 98.7 97.6 96.3 97.1 

Polur 98.8 98.8 98.8 98.3 97.6 98.0 

Vembakkam 99.2 98.6 98.9 98.1 98.5 98.3 

District 98.2 98.1 98.2 96.4 94.6 95.6 

Source: Cohort Study based on Thiruvannamalai Human Development Report 2006. 

Note: 

Primary refers to 5 to 6 and Upper Primary 8 to 9 standards. 

a3. Health Services in Thiruvannamalai 

Various health related indicators are available with respect to different blocks or other 

units of health services in Thiruvannamalai. To look at the profile of health related issues, 

we look at a selected list of indicators like the infant mortality rate (IMR), and the 

maternal mortality ratio (MMR). 

Table 4.18 gives block wise information on IMR for rural and urban areas. While 

for the urban areas, IMR is at 6.5 per thousand live births, in the rural blocks it is 

relatively high. In 2005, for example, its maximum level was 34 for Pernamallur. Figures 

for Kalasapakkam and Anakkavur were also 30 and above. A PRSP will need to look at 

interventions that will improve the IMR in these blocks. 

96

Table 4.18: Block-wise IMR in Thiruvannamalai: 2003 to 2005 

Blocks 2003 2004 2005 Blocks 2003 2004 2005 

Thiruvannamalai HUD 

Cheyyar HUD 

Thiruvannamalai 22.78 22.62 22.00 West Arni 22.26 14.72 14.80 

Thandrampet 23.26 26.61 19.00 Arni 25.24 20.40 20.30 

Chengam 27.79 31.75 32.00 Pernamallur 27.43 31.88 34.00 

Pudupalayam 29.33 35.71 25.00 Vembakkam 33.05 30.55 27.60 

Jamunamarathur 17.31 27.67 2.90 Cheyyar 32.43 18.65 26.50 

Chetpet 20.48 14.25 24.00 Anakkavur 31.87 31.43 31.30 

Polur 19.04 19.4 18.00 Vandavasi 22.17 19.40 19.50 

Kalasapakkam 24.3 22.55 30.00 Thellar 16.58 21.26 18.50 

Thurinjapuram 29.55 28.27 26.00 Rural Total 26.18 23.40 23.60 

Kilpennathur 25.32 29.62 17.00 Arni NA 9.60 NA 

Rural Total 24.11 25.06 23.00 Tiruvathipuram NA 3.00 NA 

TV Malai Municipality 19.00 Vandavasi NA 0.00 NA 

HUD Total 21.00 Urban Total NA 6.50 NA 

HUD Total NA 21.40 NA 

Source: Deputy Director of Health Services, Thiruvannamalai and Cheyyar HUD. 

a4. Health Indicators 

Maternal mortality rates for urban areas and block wise details of rural areas are given in 

Table 4.19. While for urban areas, the incidence is very low, for some of the rural blocks, 

it is somewhat higher although the incidence changes from year to year. 

Table 4.19: Block-wise Maternal Mortality Rate: 2003 to 2005 

Blocks 2003 2004 2005 Blocks 2003 2004 2005 

Thiruvannamalai HUD 

Cheyyar HUD 

Tiruvannamalai 1.8 3.4 1.4 West Arni 1.7 0.5 0.6 

Thandrampet 0.9 3.0 0.9 Arni 0.6 2.3 1.7 

Chengam 1.6 1.0 0.6 Pernamallur 2.8 0.6 1.5 

Pudupalayam 1.2 1.1 3.0 Vembakkam 0.5 0.0 3.1 

Jamunamarathur 0.0 1.3 0.0 Cheyyar 2.0 1.1 0.7 

Chetpet 1.5 1.1 0.5 Anakkavur 1.4 0.0 0.0 

Polur 0.7 0.7 1.0 Vandavasi 0.5 0.5 2.2 

Kalasapakkam 2.2 0.9 1.4 Thellar 0.0 0.4 0.7 

Thurinjapuram 0.5 1.0 0.5 Rural Total 1.1 0.8 1.4 

Kilpennathur 0.8 0.0 0.4 Arni NA 0.0 NA 

Rural Total 1.2 1.5 1.0 Tiruvathipuram NA 3.0 NA 

TV Malai Municipality NA 0.0 Vandavasi NA 0.0 NA 

HUD Total NA 0.9 Urban Total NA 0.6 NA 

HUD Total NA 0.8 NA 

Source: Deputy Director of Health Services, Thiruvannamalai and Cheyyar. 

97

4.9 Summary 


respect of the incidence of poverty, nature and level of economic activities, education 

indicators, health indicators and general developmental indicators. Demographic 

differences like the share of young population in total population, male-female ratio are 

also notable. In devising a suitable strategy for coping with spatial imbalances in the 

context of Millennium Development Goals based poverty reduction strategy, the following 

are some of the major highlights of inter-district deficiencies in Tamil Nadu. 

1. In terms of real GDDP, indicative of income differences, the most deficient five 

districts are: Villupuram, Thiruvannamalai, Dharmapuri, Krishnagiri, and Thiruvarur. 

Relative to the average, the differences across districts in per capita GDDP are quite 

large. Considering all districts the range of variation is from 0 to 108.89. 

2. In terms of gross enrolment ratio (GER), the five most deficient districts are: 


average the per capita differences in GER are limited. Considering all districts the 

range of variation is from 0 to 18.96. 

3. In terms of literacy rate, the five most deficient districts are: Dharmapuri, Krishnagiri, 

Villupuram, Perambalur, and Erode. Inter-district differences in literacy relative to the 

average are nearly twice as large as the case of GER. Considering all districts the 

range of variation is from 0 to 39.31. 

4. For life expectancy, five most deficient districts are: Theni, Dindigul, Virudhunagar, 

Ramanathapuram, and Namakkal. In this case also, the inter-district differences are 

limited. Considering all districts the range of variation is from 0 to 21.29. 

5. In terms of gender development index the five most deficient districts taking into 

account all the determinant of Gender Development Index are: Dharmapuri, 

Villupuram, Krishnagiri, Thiruvannamalai, and Perambalur. Considering all districts 

the range of variation is from 0.64 to 0.83. 

6. For gender related disabilities some of the notable districts are Dharmapuri, Salem, 

Theni, Perambalur and Virudhunagar. Considering all districts the range of variation 

relative to the Tamil Nadu average kept at 100 is: for life expectancy at birth 88.8 to 

106.15; literacy 89.05 to 119.73; gross enrolment ratio 95.62 to 106.1; and per 

capita income: 94.01 to 308.1. 

7. For population of children in the age group 0-6 the neediest districts are: 

Dharmapuri, Ariyalur, Pudukkottai, Ramanathapuram and Villupuram. Considering all 

districts the range of variation is from 0.609 to 0.843. 

98

8. For provision of safe drinking water, the neediest districts are: Ramanathapuram, 

Kanniyakumari, Thiruvallur, the Nilgiris and Sivagangai. Considering all districts the 

range of variation is from 0.5 to 0.96. 

9. For electricity connectivity the most deficient districts are: Thiruvarur, Nagapattinam, 

Pudukkottai, Ariyalur, and Ramanathapuram. Considering all districts the range of 

variation is from 0.64 to 0.94. 

10. In terms of BPL population to total rural population, the districts with highest poverty 

incidence are: Ramanathapuram (59.5 percent), Madurai (42.8 percent), Perambalur 

(39.5 percent), Karur (37 percent), and Kancheepuram and Sivagangai (35 percent). 

Considering all districts the range of variation is from 28 to 58.9 percent. 

11. In terms of composition of BPL population, the five most disadvantaged districts with 

the largest shares of landless labour are: Theni, the Nilgiris, Tirunelveli, 

Kanniyakumari, and Madurai. Considering all districts the range of variation is from 

12.7 to 41.3 percent. 

Thus, in terms of different types of deficiency and different needs the order of 

districts is quite different. Districts that appear in the list of most deficient in several 

respects are Dharmapuri, Ramanathapuram, Thiruvannamalai, Villupuram, and 

Perambalur. 

For consideration of intra-district imbalances we have examined the case of 

Thiruvannamalai (and Sivagangai) in some detail. The central message is that the policy 

reduction strategy has to aim at a block level strategy for rural areas and pay special 

attention to the limited segments of urban areas. 

There is scope for achieving allocative efficiency by relating district wise 

allocation for some of major education and health programmes as well as incomegenerating 

programmes like NREGA to district-wise indices of relative deficiency. The 

same methodology can be fallowed for allocations within a district. 

In the next chapter we look at three specific specific issues relating to water, 

land and agriculture which have strong linkages with the poverty reduction strategy. The 

achievement of the MGD goals to a large extent depends on the strategies developed to 

effectively manage the three important resources in the rural areas. 

99

100

Chapter 5 

WATER, LAND AND AGRICULTURE: ISSUES AND IMPACT ON POVERTY 

Goal 7 of the Millennium Development Goals (MDGs) has two specific targets relating to 

water and environment. Water plays a powerful role in poverty reduction through its 

impact on food production, hygiene, sanitation, health, vulnerability/food security, 

employment, and environment. Target 10 of MDGs aims to halve by 2015 the proportion 

of people without access to safe drinking water. The Committee on Economic Social and 

Cultural Rights of the United Nations’ Economic and Social Council states that “the human 

right to water entitles everyone to sufficient, safe, acceptable, physically accessible, and 

affordable water for personal and domestic uses”. Environmental issues particularly 

relating to land/soil degradation are severe in Tamil Nadu. Water and land are two 

essential inputs for agriculture. Increased use of fertilizers and pesticides has aggravated 

the problem. This Chapter provides an overview of the key water, land and agriculture 

issues in Tamil Nadu and highlights the implications for a poverty reduction strategy. 

5.1 Natural Resources and Poverty: Linkages 

Poor people rely heavily and directly on local natural resources for their livelihoods. The 

poor are disproportionately affected by large variations in water availability as they are 

the most vulnerable to water related hazards such as floods, droughts and pollution. 

Effective distribution and management of water and other resources like land are 

essential for sustainable growth and poverty reduction. 

Availability of clean water for drinking and adequate water for other household 

uses as well as for agriculture, industry and energy is essential for reducing poverty and 

hunger. Water, an important factor of production in a variety of industries and 

agriculture, is crucial for economic development and poverty reduction. Contaminated 

water and poor sanitation affect the health of poor people severely, which in turn set up 

a cycle of ill health and further impoverishment that will have severe financial and 

personal costs. Contamination of common property resources like rivers and coastal areas 

directly translate into less food, income and time for the poor. Majority of the rural poor 

usually practice rain fed agriculture and live in fear of delayed or failed rainfall. Poor are 

at risk from environmental shocks and natural disasters including excessive or deficient 

rainfall pattern and rising sea level. 

101

Water is an important input for agriculture also. Agriculture is key sector for 

poor. Hussain et. al. (2004) argue that there are five interrelated dimensions of 

agricultural water and poverty reduction: production, income/consumption, employment, 

vulnerability/food security and overall welfare. Adequate irrigation will allow poor people 

to increase their production, income and enhance income diversification opportunities, 

reducing vulnerability caused by seasonality and other factors. 

In the poverty-water interrelationship, water for agriculture has a special place. 

Irrigation is a powerful tool for providing food security, protection against adverse 

drought conditions, increased employment and stable income and greater opportunity for 

multiple cropping and crop diversification. Access to reliable irrigation can enable farmers 

to adopt new technologies, and intensify cultivation leading to increased productivity and 

greater return from farming. This in turn opens up new employment opportunities both 

on-farm and off-farm, which can increase farm income, livelihood and quality of life in 

rural areas. Overall like land, irrigation can have a wealth generating effect in agriculture 

specifically and in rural settings in general. 

Like water, land is also an important productive resource and asset for both rural 

and urban poor. For the poor, land is the primary means for generating a livelihood and 

the main vehicle for investing, accumulating wealth and transferring it between 

generations. Land ownership makes people less reliant on wage labour thereby reducing 

their vulnerability to shocks. Access to even small plots of lands to grow crops can greatly 

improve food security. Land holding size also matters. Small holdings prevent subsistence 

farms in adopting new technologies and modern inputs. Degradation of soils affect both 

productivity and overall production, thereby farm income and consumption. Forest 

degradation and deforestation severely affects not only the environment but also the 

livelihood of many poor who dependent on forest resources. 

Thus, water, land and agriculture have strong linkages with poverty reduction. 

Meeting MDGs will depend in large part on how Tamil Nadu manages its scarce water 

resources and how it develops effective water governance and improved service delivery 

mechanisms. Appropriate land policy and registration, redistribution or transfers are also 

important for realizing the MDGs. 

102

5.2 Water: Key Issues in Tamil Nadu 

Tamil Nadu is a water scarce state. 12 Per capita (annual) water availability is only about 

900 cubic meters as against the all-India average of 2200 cubic meters. Geographically, 

most of Tamil Nadu is a dry plain, with river valleys surrounded by low hills. The normal 

(annual) rainfall is 925 millimeters (mm) as against the average rainfall of 1100 mm of 

the country. Two major monsoon seasons are: northeast (October-December) with 

normal rainfall of 439 mm and southwest monsoons (June-September) with average 

rainfall of 308 mm. 13 Apart from these two monsoons, the state receives little rain during 

the winter: January and February, and summer: March to May (Table 5.1). The northeast 

monsoons are more reliable and on an average, they account for about 50 percent of 

annual rainfall in the state. The historical data on rainfall reveals that rainfall received by 

the state is highly variable and drought conditions prevail in three out of 10 years. 

Table 5.1: Rainfall in Tamil Nadu 

(Millimetres) 

Period Southwest Northeast Winter Summer Total Rainfall 

1970s (Avg.) 329.4 475.0 13.4 115.6 933.4 

1980s (Avg.) 319.9 371.3 44.4 117.2 852.9 

1990s (Avg.) 304.1 519.7 23.7 103.8 951.4 

2000-01 314.5 335.5 16.8 118.4 785.2 

2001-02 260.0 379.4 70.0 85.8 795.2 

2002-03 185.4 407.1 8.7 129.8 731.0 

2003-04 336.5 403.1 11.6 283.4 1034.6 

2004-05 360.7 472.1 14.3 231.7 1078.8 

2005-06 308.4 830.2 15.6 150.9 1305.1 

2006-07 250.9 497.5 10.9 100.4 859.7 

2007-08 341.6 515.4 46.2 261.2 1164.4 

Last 8 Years Average 294.8 480.0 24.3 170.2 969.3 

Source: Government of Tamil Nadu (2007), Eleventh Five Year Plan 2007-2012, State Planning Commission; 

and Tamil Nadu- An Economic Appraisal (2006-07 and 2007-08). 

Further, large perennial rivers do not flow through its territories. The state has 

17 river basins (including groups of minor basins) of which the Cauvery basin is the 

12 The population and area of Tamil Nadu account for 7 and 4 percent, respectively of that of India but the available water 

resources of the state account for only 3 percent of total water available in the country. 

13 Most of the rains from the southwest monsoon are blocked by the Western Ghats and southwest monsoon rains are 

highly variable. 

103

largest. 14 Cauvery water irrigates nearly 20 million hectares of land. But Tamil Nadu is 

lower riparian state. The total water resources of the state comprise surface water of 

24.1 billion cubic meters and groundwater of 23.1 billion cubic meters (Table 5.2). 

Utilization rate of surface water is estimated to be 93 percent and that of groundwater 60 

percent. Evidence indicates that the rate of extraction of groundwater has exceeded 

recharge rates in many parts of the state. 

Table 5.2: Water Resources 

Details MCM Percent TMC 

Surface 16769 35.5 592 

Shares from Other States 7391 15.6 261 

Groundwater 23070 48.8 815 

Total 47230 100.0 1668 

Source: Government of Tamil Nadu (2007), Eleventh Five Year Plan 2007-2012, State Planning Commission. 

Note: MCM – Million Cubic Meters; TMC - Thousand Million Cubic Feet 

Major water supply sources in Tamil Nadu are (i) canals with 9786 kms length, 

(ii) 41260 tanks, and (iii) 18.47 lakh wells (Table 5.3). Irrigation is a high volume user of 

water accounting for about 90 percent of total water uses. The sources of irrigation are 

major, medium (surface irrigation) and minor irrigation schemes including pump sets, 

tube wells and lift irrigation. 15 Surface irrigation schemes are generally funded from 

public sector outlays while ground water development is done largely through individual 

and cooperative efforts with the help of institutional finance mobilized through land 

development banks, nationalized commercial banks, state cooperative banks with 

refinance from National Bank for Agriculture and Development (NABARD) and 

government subsidy in certain cases. 

14 

All are flowing eastwards from the Western Ghats and Deccan plateau. Cauvery, Palar, Vellar, Vaigai, and 

Tambaraparani are major rivers. The Cauvery delta has been the rice bowl of the state for over 1500 years since the 

construction of the Grand Anicut. 

15 In 1950-51, irrigation projects were divided into three categories: major projects costing more than Rs. 50 million each; 

medium projects costing between Rs. 1 million and Rs. 50 million each; and minor works costing less than Rs. 1 million 

each. In 1978, the Indian government adopted a new classification, depending on cultivable areas that the project 

commands. Projects that have a cultivable command area of more than 10, 000 ha are considered as major while 

projects having command area between 2000-10000 ha are considered as medium projects. Minor schemes have a 

cultivable command area of less than 2000 ha. 

104

Table 5.3: Sources of Water Supply in Tamil Nadu (2006-07) 

Details 

Nos. 

Length of Government Canals (kms.) 9786 

Length of Private Canals (kms.) 11 

Total Length of Canals 9797 

Number of Tanks having Ayacut 40 ha 7982 

Number of Tanks having Ayacut less than 40 ha 33278 

Total Number of Tanks 41260 

Number of Tube wells used for Irrigation 293097 

Number of ordinary wells used for Irrigation 1554039 

Total Number of Wells used for Irrigation 1847136 

Source: Tamil Nadu - An Economic Appraisal (various issues). 

Note: ha – hectares, kms – kilometers. 

a. Water Use in Agriculture 

Most farmers own either irrigated land or non-irrigated land or both. According to the 

55 th round of the NSS, approximately 25 percent of farms used little or no irrigation while 

in 65 percent of farms 80-100 percent of their lands were irrigated (Table 5.4). These 

data indicate that programmes that focus on irrigated crops will not directly benefit 25 

percent of farm households and programmes that focus on non-irrigated crops will not 

directly benefit 65 percent of farms in the state. 

Percent of Cultivated 

Area Irrigated 

Table 5.4: Access to Irrigation by Farms 

Average Share of 

Irrigated Land per 

Farm (percent) 

Distribution of 

Farm (percent) 

0 – 20 0.43 24.80 0.69 

20 – 40 30.75 2.27 1.70 

40 – 60 51.19 4.09 1.34 

60 – 80 67.99 4.15 1.53 

80 – 100 99.23 64.69 0.85 

Total 71.69 100.00 0.88 

Source: Dorosh and Sur (2004). 

Average Farm 

Size (hectares) 

The state has a net irrigated area of 2.889 million hectares (in 2006-07). The 

State’s irrigation intensity of 118 percent is relatively low as compared to the all-India 

average irrigation intensity of about 130 percent. About 56 percent of net sown areas 

are irrigated (Table 5.5). 

105

Year 

Table 5.5: Net Sown, Gross Area and Irrigation Intensity in Tamil Nadu 

(‘000 hectares) 

Net Area 

Irrigated 

(NAI) 

Gross Area 

Irrigated 

(GAI) 

Net 

Area 

Sown 

(NAS) 

Gross 

Cropped 

Area 

(GCA) 

Irrigation 

Intensity 

(percent) 

Cropping 

Intensity 

(percent) 

NAI as 

Percent 

of NAS 

GAI as 

Percent 

of GCA 

1970-71 2592 3410 6169 7384 131.56 119.7 42.02 46.18 

1980-81 2570 3294 5360 6469 128.17 120.69 47.95 50.92 

1990-91 2373 2894 5578 6632 121.96 118.90 42.54 43.64 

2000-01 2887 3490 5303 6338 120.89 119.52 54.44 55.06 

2001-02 2801 3412 5172 6226 121.81 120.38 54.15 54.80 

2002-03 2310 2622 4590 5191 113.51 113.10 50.30 50.50 

2003-04 2148 2479 4689 5316 115.40 113.40 45.81 46.63 

2004-05 2637 3087 5097 5889 117.06 115.54 51.74 52.42 

2005-06 2919 3397 5244 6033 116.37 115.05 55.66 56.31 

2006-07 2889 3416 5126 5843 118.24 113.98 56.36 58.46 


Approximately 55 percent of the net irrigated area is irrigated by well water and 

the remaining by canals, tanks and other sources such as streams and springs. The net 

irrigated area increased by about 11.5 percent during 1970-71 to 2006-07 mainly due to 

increase in area irrigated by wells (Table 5.6). 

Table 5.6: Net Irrigated Area by Source of Irrigation 


Year Canal Tank Wells Others Total 

1970-71 862 902 787 41 2592 

1980-81 889 590 1067 24 2570 

1990-91 769 531 1059 14 2373 

2002-03 614 422 1263 11 2310 

2003-04 449 385 1299 15 2148 

2004-05 754 465 1400 18 2637 

2005-06 800 575 1537 7 2919 

2006-07 782 531 1566 9 2889 


More than 85 large and medium dams have been constructed since 

independence. As the surface irrigation potential has been virtually exhausted, 

modernizing/rehabilitating existing systems is crucial to improve the efficiency of surface 

irrigation in the state. Most of the canals in the state are old and have very poor 

efficiency as a result of seepage and silting in the canals. In recent years, the state has 

undertaken some major canal modernization projects with the aide of World Bank 

106

funding under the Water Resources Consolidation Project. Appendix Table 5.1 shows the 

major and medium irrigation projects in Tamil Nadu. 

Although tank irrigation accounted for about 35 percent of net irrigated area in 

the state in 1970-71, its share declined steadily over time because of siltation in tank 

beds and supply channels, encroachments in the tank bund, foreshore and supply 

channels and damaged sluices, weirs and bunds. Currently, tanks irrigate about 0.6 

million hectares of lands. Due to water shortages a large number of tanks are defunct. 

Groundwater irrigation increased due to rural electrification, the availability of 

affordable irrigation pump sets and cheap or free electricity for agriculture. The number 

of wells and the area irrigated by them had increased significantly over the years. During 

1981-82 to 2006-07, the number of wells increased from 1.68 million to 1.85 million and 

the area irrigated by wells increased from 1.7 million hectares to 15.7 million hectares. 

The problem now facing groundwater irrigation is that the depth of bore wells in hard 

rock area has increased to as much as 600 feet to 1000 feet. Dug well irrigation is only 

possible now in canal and tank command areas. Spacing norms have been prescribed 

based on the guidelines issued by NABARD. Dug wells must be at least 150 meters apart, 

and deep tube wells must be at least 600 meters apart (Dorosh and Sur, 2004). 

Agriculture faces increasing competition for water from industry and domestic 

users. According to Eleventh Plan prepared by the State Planning Commission (2007), 

about 93 percent of present use of water is for agriculture (Table 5.7). But the demand 

for water is continuously on the rise with the growth of population, industry and 

agriculture while the availability of water remains almost constant. The total surface 

water potential (excluding Cauvery) is 13,117 million cubic meters (MCM) while the 

groundwater potential is 15,346 MCM. 16 

Table 5.7: Water Demand in Tamil Nadu 

Details 

TMC 

Drinking (domestic) 51.4 (2.71%) 

Irrigation 1766 .0 (93.2 %) 

Industry, Hydro power, Live stock 77.4 (4.08 %) 

Total Demand 1894.8 (100 %) 

Water Resource 1587.0 

Deficit 307.8 


16 Data for the Cauvery basin are not available due to the inter-state dispute. 

107

The total water demand already exceeds the availability and the deficiency is 

307.8 thousand million cubic feet (TMC). It is estimated that the industries will require 

1307.20 MCM in 2014 as against its demand of 636 MCM in 1999 (Table 5.8). The 

requirement for domestic use is also projected to rise. The water deficit would rise to 

2481 MCM in 2014. Since these figures exclude the Cauvery (the major) basin, the deficit 

will be more than what is shown. Imbalance between water needs and resources are 

likely to induce a variety of conflicts between different users. 

Table 5.8: Projected Water Demand in Tamil Nadu * 

(Million Cubic Metre) 

1999 2004 2014 

Sectors Demand Percent Demand Percent Demand Percent 

Agriculture 29079 93.2 29079 92.4 27808 89.9 

Domestic 1002 3.2 1088 3.5 1346 4.3 

Industries 636 2.0 809 2.6 1307 4.2 

Live Stock 387 1.2 387 1.2 387 1.3 

Hydro Power 60 0.2 66 0.2 68 0.2 

Others 28 0.1 28 0.1 28 0.1 

Total 31192 100.0 31458 100.0 30944 100.0 

Source: Water Resources Organization (1998), State Framework: Water Resources Plan of Tamil Nadu. * 

Note: Excluding Cauvery Basin. 

b. Water Quality 

There are also serious water quality problems in some of the basins due to industrial 

pollution. 17 In Chennai particularly, the waterways are severely polluted due to the 

discharge of domestic waste. Sea water intrusion is also occurring along the coast due to 

the over-extraction of groundwater. In some parts of the state, there is contamination 

due to excess fluoride. Agriculture, a major non-point source of water pollution, also 

creates severe environmental issues. Heavy use of fertilizers can have major adverse 

impacts on surface water quality, soils and groundwater. The environmental 

consequences of excess use of fertilisers are shown in Annexure 5.1. Improper/inefficient 

use of chemical fertilizers (pesticides) would result in food production polluted with 

nitrates (toxic), reduction in yield, environmental degradation (soil degradation, water 

and air pollution, climate change and health hazards) and extra cost of production. 

c. Rural and Urban Water Supply Status 

There are 86981 rural habitations in the state. In 2002-03, only 36.8 percent of 

habitations were fully covered by rural water supply and 49.06 percent covered partially. 

17 Effluent discharged from industries significantly affects surface water quality, soil and groundwater. 

108

In 2006-7, 65.83 percent of habitations were fully covered by rural water supply and 

33.62 percent were partially supported by the rural water supply (Table 5.9). 

Year 

Table 5.9: Rural Water Supply Status: By Habitations 

Total Number 

of Habitations 

Habitations Fully Covered 

Habitations Partially Covered 

Number Percent Number Percent 

2002-03 81787 30117 36.82 40124 49.06 

2003-04 81787 35727 43.68 36777 44.97 

2004-05 81787 46249 56.55 32314 39.51 

2005-06 81787 55149 67.43 25670 31.39 

2006-07 86981 57260 65.83 29241 33.62 

Source: Government of Tamil Nadu (2007), Eleventh Five Year Plan 2007-2012, State Planning Commission 

and Tamil NAdu- Economic Appraisal 2006-07. 

Of 718 urban towns (other than Chennai) in the state, 5 are corporations, 152 

are municipalities and 252 are town panchayats. Depending on the availability of per 

capita per day water supply, they are classified as good, average, and poor. Table 5.10 

reveals that 199 municipalities and town panchayats were poor in 2002. In 2007, only 29 

of them were poor. During the same period, the total number of towns having good 

performance increased from 290 to 382. 

Table 5.10: Status of Urban Water Supply 

Civic Status Good Average Poor Total 

2002 2007 2002 2007 2002 2007 2002 2007 

Corporations - 1 5 4 - - 5 5 

Municipalities 38 52 34 90 30 10 102 152 

Town 

253 329 190 213 169 19 611 561 

Panchayats 

Total 290 382 229 307 199 29 718 718 


Note: For Corporation, Good means above 110 litre per capita per day (lpcd), Average: 70 – 110 lpcd, Poor: 

less than 70 lpcd; For Municipality, Good: 90 lpcd, Average: 50-89 lpcd, Poor: less than 50 lpcd; For 

Town Panchayats, Good: 70 lpcd, Average: 40 – 69 lpcd, Poor: less than 40 lpcd. 

d. Irrigation Financing 

Water is a state subject under the Indian Constitution. 18 The public works department 

(PWD) is solely responsible for the maintenance of major and medium irrigation works. 

The state has allotted Rs. 972 crore for irrigation for the Eleventh plan period (2007- 

18 However, the Centre is also financing through the schemes shared between the centre and the state, and the centrally 

sponsored schemes. On completion, all projects are transferred to the state for maintenance. 

109

2012). The state government spends roughly about 2 percent of its total revenue 

expenditure on irrigation. The revenue-expenditure ratio was less than one percent for 

major schemes and about 2 percent for medium works. Thus, almost the entire amount 

spent on these schemes can be considered as subsidy to this sector. 

The interest charge was the main component (55 percent) of the total revenue 

expenditure on major and medium schemes followed by salary (including wages, 

dearness allowance and pension) with 33 percent share. The maintenance work (plus the 

minor and major works) alone accounted for about 10 percent, i.e. one-tenth of 

budgetary allocation (Table 5.11). 

Table 5.11: Expenditures According to Detailed Heads (2000-01) 

Detailed Heads of 

Major and Medium 

Irrigation 

Minor 

Irrigation 

Account 

Amount 

(Rs. lakh) 

Percent 

share 

Amount 

(Rs. lakh) 

Percent 

Share 

Maintenance 3311.73 9.5 2003.09 97.6 

Minor Works 64.45 0.2 0 0.0 

Major Works 31.71 0.1 48.93 2.4 

Interest 19068.44 54.8 0 0.0 

Salaries 7506.53 21.6 0.86 0.0 

Wages 20.67 0.1 0 0.0 

Professional/Special fees 878.20 2.5 0 0.0 

Pension 121.46 0.3 0 0.0 

Dearness Allowances 2883.39 8.3 0.33 0.0 

Festival Advances 82.49 0.2 0 0.0 

Training 63.59 0.2 0 0.0 

Scholarships and Stipends 10.92 0.0 0 0.0 

Travel Expenses 486.28 1.4 8 0.0 

Motor Vehicles 64.63 0.2 0 0.0 

Petroleum, Oil and Lubricants 145.83 0.4 0 0.0 

Tools and Plants 0.44 0.0 0 0.0 

Rent, Rates and Taxes 34.34 0.1 0 0.0 

Total 34769.10 100.0 2053.17 100.0 

Source: Computed from Detailed Demand for Grant (Demand No. 38) PWD, Budget Publication, 

Government of Tamil Nadu. 

Thus, the maintenance works were undertaken out of the residual funds left after 

meeting other commitments. Further, in almost all major and medium systems, the 

maintenance expenditure is below the norm recommended by the Ministry of Water 

Resources. The low cost recovery ratio (about 16 percent of total maintenance cost) is 

110

the major cause for poor maintenance of systems. Inadequate funding on maintenance 

works coupled with lack of expenditure prioritization has led to rapid deterioration of 

surface irrigation. The cost of water for farmers and water users did not reflect the 

scarcity value of water. 

In July 2003, the government increased irrigation water charges. Previously 

water charges were levied at a base rate that varied by crop, season, and soil quality plus 

an additional charge equivalent to six times the base rate. But the additional charge was 

transferred to the local panchayats. From July 2003, an additional water charge of Rs. 

1.50 per hectares has been levied. In addition, the Tamil Nadu Farmers Management 

Irrigation System Act empowers the water users associations (WUAs) to collect a fee 

ranging between Rs. 250 and Rs. 500 per hectares and use for O&M of the systems. 

e. Institutional Aspects 

Institutional arrangement also did not adequately address water resource management, 

allocation and planning. Farmers’ involvement in the operation and maintenance of 

irrigation system has been minimal. However, efforts have been made in recent years to 

address many of the policy and institutional issues plaguing the water sector. The state is 

now undertaking comprehensive water planning on a river basin basis and has 

decentralized water resource management along river basins. The Tamil Nadu Farmers 

Management of Irrigation Systems Bill was passed by the State Legislative Assembly in 

May 2000. This Bill created a three-tier system management organization, including 

WUAs at the outlet and WUAs at the 500 hectares command levels and a joint 

management committee (called Farmers’ Council) at the project level. It also allows for 

the full or partial transfer of O&M responsibilities to these bodies. Each WUA has 

complete responsibility for water distribution and maintenance in the area under its 

jurisdiction. The Farmers Council is entrusted to deciding on water allocation and other 

issues if any arises (Dorosh and Sur, 2004). 

The state also passed the Ground Water Regulation and Management Act. It has 

also enacted an important legislation, which requires rainwater harvesting system in all 

buildings to recharge the groundwater and arresting sea water intrusion. The program 

for rain water harvesting and runoff management has been implemented on watershed 

basis. Further, rain water harvesting works such as farm ponds, check dams, percolation 

ponds and rejuvenation of failed, unused and abandoned wells have been taken up under 

all Soil and Water Conservation Programme. 

111

A specific unit was established in PWD to study the environmental aspects of 

water resources. The Dam Rehabilitation and Improvement Programmes are proposed to 

commence during 2009-10 funded by Government of India with World Bank assistance in 

order to strengthen and maintain the dams in view of ageing and maintenance 

requirements. 

The state has also approached the centre to provide funds for the interlinking of 

rivers within the state under the Accelerated Irrigation Benefit Programme. Initiatives 

have been made initially to link the rivers to primarily serve as flood carriers and a 

measure of flood mitigation and to prevent water wastage and for the flood flows to 

reach the drought prone areas of the state. So far three links have been explored by the 

state: (i) Cauvery – Agniar - South Vellar – Manimuthar – Vagai - Gundar, (ii) 

Tambiraparani – Karumeriar - Nambiar, and (iii) Pennaiyar - Cheyyar. 19 

f. Resource Requirement for Safe Drinking Water 

In a recent study by Sen et. al (2008), estimated, using information from Census 2001, 

the resource requirements for providing access to safe drinking water to all households in 

Tamil Nadu. For rural areas, households that got water from a tap, hand pump or tube 

well located within a premise or nearby were considered, as having access to safe 

drinking water. As per information from the Department of Drinking Water Supply, 

Government of India, per capita cost of covering rural population with safe drinking water 

was taken at Rs. 1200 per capita for providing piped water supply. At this rate, for the 

rural areas, Sen et. al estimate the requirement of capital investment at about Rs. 993 

crore. 

For urban areas, information from Census 2001 on the coverage of population 

by safe drinking water was combined with per capita cost of water supply schemes in 

urban areas provided by the Planning Commission, Government of India, 1983 (updated 

to 2003-04 prices, amounting to Rs. 1780 per capita). On this basis, the resources 

required for providing water supply to the entire population in urban areas was estimated 

to be Rs. 939 crore. Together, the total requirement of resources for providing water 

supply to the entire population was estimated to be about Rs. 1932 crore. 

These resources can only ensure coverage and not adequate supply of water in 

the state. As per the Tamil Nadu Water Supply and Drainage Board, on average, only 

19 Policy Note for the year 2008-09, PWD, Irrigation. 

112

about 30 litre per capita per day (lpcd) of water is supplied in the rural areas as 

compared to the norm of 40 lpcd that needs to be supplied. In the urban areas also, the 

average quantity of water supplied in the urban areas of the state is about 70 lpcd is less 

than the norm of 110 lpcd for corporations. In the city of Chennai where the quantity of 

water that needs to be supplied as per the national norm is about 135 lpcd, only about 

90 lpcd is supplied. Resources required for supplying water as per norm would be 

considerably higher than estimated here. 

5.3 Land: Key Issues 

Current land distribution and use in much of Tamil Nadu reflect centuries old patterns of 

settlement and cultivation. In pre-colonial society, river valley villages where agriculture 

centered on rice were divided in to (i) the land owning Brahman and Vellala (nobles), and 

(ii) the outcaste laborers (usually Pallan or Paraiyan). The economy of the drier plains 

with generally poor soils outside the valleys was based on livestock hunting, cultivation of 

millet and non-agricultural activities (Dorosh and Sur, 2004). 

Net sown area and fallow lands add up to total land available with farmers. It 

was 76.08 lakh hectares in 1980-81 and it declined to about 67 lakh hectares in 1999-00 

and to about 62 lakh hectares in 2005-06. Due to the policies of land ceiling and the land 

to tiller, very large farms disappeared and the distribution of land holdings (in Table 5.12) 

shows the dominance of marginal and small farmers. The average farm size in 1970-71 

was only 1.45 hectares (with more than 50 percent of farms having less than 1 ha.). It 

further declined to 0.89 ha in 2000-01. 

Table 5.12: Land Distribution in Tamil Nadu 

Land Holding Size 

(hectares) 

1970- 

71 

1976- 

77 

1985- 

86 

1995- 

96 

2000- 

01 

Less than 1 0.42 0.41 0.37 0.38 0.37 

1.0 – 2.0 1.42 1.41 1.41 1.40 1.39 

2.0 – 4.0 2.75 2.75 2.74 2.73 2.72 

4.0 – 10.0 5.83 5.77 5.78 5.60 5.68 

Above 10 16.94 17.28 18.78 21.68 19.48 

All Sizes: Total 1.45 1.25 1.01 0.95 0.89 

Source: Government of Tamil Nadu (2007), Eleventh Five Year Plan 2007-2012, State Planning 

Commission. 

About 97 percent of land holdings are smaller than 4 hectares each. The small 

holding size sets the limit for investment in farm assets and modern inputs that are 

113

essential for intensive farming. Such farms tend to be subsistence oriented. Further, it is 

very difficult to raise agricultural income substantially, given the very small holding size. 

Land ceilings in Tamil Nadu (4.86 hectares for irrigated land with two crops and 

12.14 hectares for irrigated land with one crop and 24.28 hectares for dry land) have 

relatively little effect on land distribution due to registration of land in the names of 

various family members and even in the names of workers. Nonetheless, the number of 

farms greater than 10 hectares is rather small accounting for only about 9 percent of 

area. 

a. Land Use Pattern 

The reported area of Tamil Nadu is around 13 million hectares. Of this, forest area is 

2.106 million hectares (2006-07) and accounts for 16.17 percent of total land area of the 

state (Table 5.13), as against environmentally desirable 33 percent. However, from 1970- 

71 onwards there has been increase in forest area largely due to many afforestation and 

conservation schemes implemented by the government. However, at the slow pace of 

expansion, it is most likely to be less than 20 percent in the next decades. 

Table 5.13: Land Use Pattern in Tamil Nadu 


Details 1970-71 1980-81 1990-91 1999-00 2006-07 

Reporting Area 13004 13003 13019 12991 13027 

Forests 2013 2022 2155 2134 2106 

Barren and Uncultivable Land 832 577 509 476 502 

Land Put to Non-agriculture Uses 1489 1747 1820 1978 2160 

Permanent Pastures and Grazing 

Land 231 159 124 123 110 

Land under Miscellaneous Tree 

Crops 226 212 234 243 268 

Cultivable Waste Land 507 343 290 349 354 

Other Fallows 573 459 1044 1140 1493 

Current Fallows 964 2120 1264 1085 907 

Net Area Sown 6169 5364 5579 5463 5126 

Area Sown More Than Once 1215 1109 1053 1054 717 

Gross Cropped Area 7384 6473 6632 6517 5843 


Area under permanent pastures and grazing and area of under miscellaneous 

tree crops and groves are shrinking (i.e., from 4.57 lakh ha in 1970-71 to 3.78 lakh ha in 

114

2006-07). However, total area under these categories is very small (less than 3 percent 

of total area). Area under cultivable waste has come down, (from 5.07 lakh ha in 1970- 

71 to 3.54 lakh ha in 2006-07), due to the pressure on land for cultivation of crops. But 

the area under current and other fallows is increasing (from 15.37 lakh ha in 1970-71 to 

24 lakh ha in 2006-07). These are marginal low productive lands (cultivable but remains 

uncultivable for one to 5 years thereafter) and do not have assured irrigation. Table 5.14 

shows that the current fallow is inversely proportional to the amount of rainfall. However, 

in the case of other fallows, this relationship does not hold. One suitable strategy could 

be to increase the area under cultivation through reclamation of cultivable waste and 

fallow lands and use of modern irrigation and farm practices to increase farm production 

in the present conditions of frequent monsoon failures and water scarcity in the state. 

Year 

Rain 

(mm) 

Table 5.14: Impact of Rainfall on Current Fallow 

Deviation 

from Normal 

Current Fallow 

(000 ha) 

Current Fallows 

as Percent of 

Total Land 

Other 

Fallow 

Other Fallow as 

Percent of 

Total Land 

2000-01 874 (-) 19.8 1134 8.7 1228 9.4 

2001-02 775 (-) 18.4 1026 8.0 1409 10.8 

2002-03 748 (-) 20.0 1505 11.5 1491 11.5 

2003-04 868 (-) 07.0 954 7.3 1863 14.3 

2004-05 1226 (+) 32.0 692 5.3 1704 13.1 

2005-06 1305 (+) 36.0 759 5.8 1518 11.7 


Note: mm – millimeters; ha – hectares 

The other fallows and cultivable waste can be brought under cultivation by 

suitable reclamation practices, involving investments that will yield very low return. 

Farmers may not be in a position to make such investments, because most of them are 

marginal and small farmers. Thus, availability of cultivable land sets the limits for 

extensive farming. In 2005-06 net shown area was less than 52. 4 lakh hectares. 

b. Landless Agricultural Labour 

According to Census 2001, there are about 13.8 million workers dependent upon 

agriculture and allied activities such as horticulture, forestry, live-stock and sericulture 

(Table 5.15). Of them only about 8 million are cultivators and about 3 million workers are 

in allied activities. The remaining are agricultural labourers who know only farming but 

have no land of their own. There is also not much land for redistribution. Therefore, they 

have to survive as wage earners in agriculture and seek jobs from cultivators. However, 

most of the cultivators are small land holders and use own family labour to the extent 

115

possible. Even some of the marginal and small farmers seek jobs outside their farms as 

they area able to cultivate in only one season. 

Table 5.15: Total Agricultural Workers 

(Million) 

Details 1981 1991 2001 Annual Growth rate (%) 

Agricultural Workers 12.59 14.8 13.76 1981-1991:1.63 1991-2001: -0.73 

Source: Census of India, 2001. 

Table 5.16, based on National Sample Survey (NSS) data shows that the largest 

workforce was in the primary sector, but its share has been falling since 1993-94. The 

share of secondary and tertiary sector has increased. The primary sector accounted for 

57.9 percent of total employment in 1983. This share fell to 40.5 percent in 2004. During 

this period, the share of workforce in the manufacturing sector increased from 20.4 

percent to 28.2 percent. The share of the tertiary sector also increased from 21.7 

percent in 1983 to 31.3 percent in 2004. The main policy challenge is therefore to 

absorb the workforce released from agriculture in the tertiary sector. This would call for 

strategies for education and training. Adequate investment in these would lead to a 

quantum jump in the level of human development as people are employed with higher 

educational qualifications will earn higher per capita incomes in the fast growing tertiary 

sector. 

Table 5.16: Sectoral Profile of Employment 

(Millions) 

Year Primary Secondary Tertiary Total 

1983 13.9 (57.9) 4.9 (20.4) 5.2 (21.7) 24.0 (100) 

1987-88 13.9 (53.7) 5.9 (22.8) 6.0 (23.2) 25.9 (100) 

1993-94 15.4 (54.0) 6.2 (21.8) 6.9 (24.2) 28.5 (100) 

1999-00 14.6 (50.3) 6.9 (23.8) 7.5 (25.9) 29.0 (100) 

2004 11.9 (40.5) 8.3 (28.2) 9.2 (31.3) 29.4 (100) 

Note: Computed based on NSS Usual (Principal + Subsidiary) Status data. Figures in parentheses are percent 

share. 

c. Labour Productivity in Primary Sector 

Table 5.17 highlights sectoral labour productivity by relating the work force and gross 

value added (GVA) per worker for the primary, secondary and tertiary sectors. The labour 

productivity (output per worker as measured by gross value added (GVA) per capita) in 

the primary sector with GVA at Rs. 10593 in 2004 is nearly 5 times as low as in the 

tertiary sector with GVA per capita of Rs. 57491 and that in the secondary sector is 

116

nearly 3.5 times as high as the primary sector. During 1983 to 2004, the labour 

productivity increased only from Rs. 5888 to Rs.10593 (1993-94 prices) in the primary 

sector. It increased from Rs. 21922 to Rs. 34597 in the secondary and from Rs. 24550 to 

Rs. 57491 in the tertiary sector. During 1993-94 to 2004, the GVA in the primary sector 

increased at 1.4 percent while employment (-2.37 percent) registered negative growth. 

Table 5.17: Employment and Labour Productivity in Various Sectors 

Sectors Indicators 1983 1987- 

88 

1993- 

94 

1999- 

00 

2004 Growth Rates 

(%) 

1983 to 1993-94 

1993- to 2004 

94 

Primary Employment 13.9 13.9 15.4 14.6 11.9 1.08 -2.37 

GVAper capita 5888 6625 9263 10616 10593 4.64 1.35 

Secondary Employment 4.9 5.9 6.2 6.9 8.3 2.41 2.96 

GVA per capita 21922 21054 31274 41006 35497 3.62 1.27 

Tertiary Employment 5.2 6 6.9 7.5 9.2 2.77 2.91 

GVA per capita 24550 29559 34630 54375 57491 3.5 5.20 

Total Employment 24 25.9 28.5 29 29.4 1.75 0.31 

GVA per capita 13205 15199 20193 29164 32299 4.34 4.81 

Source (Basic Data): Central Statistical Organisation, National Sample Survey and EPW Research Foundation 

(for GSDP figures 1983 and 1987-88). 

Note: Employment in millions and gross value added (GVA) in Rs. (1993-94 prices). 

d. Waste Land 

Tamil Nadu has 17303.29 sq. km of its land designated as wastelands, which is about 

13.3 percent of total geographical area of the state (Vencatesan, 2006). In 2006-07, the 

State Government implemented a scheme “Distribution of Two Acre Wastelands to 

Landless Poor Agricultural Labour Families”. The major objectives of the scheme are to 

empower landless agricultural labour households through distribution of entitlements on 

government wastelands to them, and to develop both government and private 

wastelands into cultivable lands. 

The entitlement on Government poramboke lands will be distributed to landless 

agricultural labour households and the entitlements on Government poramboke 

wastelands under encroachment by farmers will be accorded to the existing occupants. 

Private patta wastelands of small and marginal farmers will be developed and made 

suitable for cultivation and this shall be done either as individual fields or as a cluster of 

fields. Tamil Nadu Watershed Development Agency is implementing this scheme, 

dovetailing various schemes for development of land, irrigation, and agricultural 

production in the Departments of Agriculture, Horticulture, and Rural Development. Soil 

117

and Water tests are conducted in each field and Soil Health Cards are prepared and 

distributed to farmers at free of cost. 

Although some initial land development activities are carried out before the 

distribution of land, most other activities after the legal documents are handed over to 

the beneficiaries. The lands are distributed once in three months. So far about 2 lakh 

acres of lands have been distributed to about 1.75 lakh beneficiaries. 

e. Soil Conservation 

Land provides food, fuel, fodder and shelter besides supporting most forms of economic 

activity. Land degradation, which means changes in the quality of soil, water, terrain, 

biotic resources and other characteristics that results in the loss of biological or economic 

productivity of land, is mainly due to soil erosion, caused by natural and man-made 

causes such as deforestation, overgrazing, reckless mining, and general mismanagement. 

Physical as well as biological deterioration of land with associated fertility depletion also 

occurs due to water logging, salination, alkalination, acidification etc. Soil erosion causes 

loss of run-off water, plant nutrients and micro flora. It also results in siltation of 

reservoirs and river beds affecting both irrigation and hydro electric potential. It also 

leads to floods in plains and valleys causing damage to crops, animals and human life. 

In Tamil Nadu, soil erosion by wind is prevalent in the Cumbum Valley on the 

eastern side of the Western Ghats, and Tirunelveli and Thootukudi districts. The coastal 

areas of Ramanathapuram district are also affected. Besides, almost the entire lands 

under rain fed agriculture are subjected to sheet and gully erosion. The problem of 

salinity and alkalinity exists in Kancheepuram, Tanjor, Nagapatnam, Thiruvarur, and 

Thiruvannamalai districts. 

Tamil Nadu was one of the pioneer states, implementing soil conservation 

programs in agricultural lands since 1949. In 1959, wind erosion control measures were 

initiated. The Soil Conservation in tribal areas has been taken up in since 1976. Further, 

Soil Conservation in the Catchments of River Valley Project (1976), Soil Conservation 

under Western Ghats Development (1982), and Soil Conservation under Hill Area 

Development (1987) are the special projects implemented by Agricultural Engineering 

Department. 

118

5.4 Agriculture: Key Issues 

Agriculture continues to be the dominant sector providing livelihood for more than 50 

percent of the people in Tamil Nadu, contributing about 12 percent of the GSDP. 

a. Crop Pattern 

The cropping pattern in Tamil Nadu is shown in Table 5.18. Paddy is the dominant crop 

accounting for 33 percent of Gross Cropped Area (GCA). 

Table 5.18: Croping Pattern in Tamil Nadu 

2006- 

Crops Details 1980-81 1990-91 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 07 

Paddy (lakh ha) 22.29 18.56 20.8 20.6 15.17 13.97 18.73 20.5 19.31 

% 34.45 27.99 30.42 33.09 29.22 26.28 31.81 33.98 33.05 

Millets (lakh ha) 13.36 11.81 7.33 6.46 7.12 9.03 8.24 7.41 6.99 

% 20.65 17.81 10.72 10.38 13.72 16.99 13.99 12.28 11.96 

Pulses (lakh ha) 5.44 8.47 6.88 6.85 5.63 5.37 5.9 5.25 5.37 

% 8.41 12.77 10.06 11.00 10.85 10.10 10.02 8.70 9.17 

(lakh ha) 41.09 38.85 35.01 34.52 27.92 28.37 32.87 33.16 31.66 

Total: Food Grains % 63.51 58.58 51.20 55.44 53.79 53.37 55.82 54.96 54.18 

Sugarcane (lakh ha) 1.83 2.33 3.15 3.21 2.61 1.92 2.22 3.35 3.91 

% 2.83 3.51 4.61 5.16 5.03 3.61 3.77 5.55 6.69 

Vegetables (lakh ha) - - 2.2 2.18 1.62 1.91 2.15 2.34 2.38 

% 3.22 3.50 3.12 3.59 3.65 3.88 4.07 

Fruits (lakh ha) - - 2.23 2.29 2.23 2.21 2.36 2.58 2.67 

% 3.26 3.68 4.30 4.16 4.01 4.28 4.57 

(lakh ha) - - 8.5 8.52 7.77 8.24 8.58 8.9 9.27 

Total: Horticulture % 12.43 13.68 14.97 15.50 14.57 14.75 15.75 

(lakh ha) - - 45.36 44.93 37 37.18 43.53 44.7 43.34 

Total: Food Crops % 66.34 72.17 71.28 69.94 73.92 74.09 74.17 

Cotton (lakh ha) 2.21 2.39 1.7 1.64 0.76 0.98 1.29 1.1 1.0 

% 3.42 3.60 2.49 2.63 1.46 1.84 2.19 1.82 1.71 

Groundnut (lakh ha) 8.42 9.63 6.99 6.63 5.02 5.92 6.16 6.19 5.08 

% 13.01 14.52 10.22 10.65 9.67 11.14 10.46 10.26 8.69 

Coconut (lakh ha) 1.12 1.8 3.23 3.36 3.46 3.53 3.57 3.71 3.75 

% 1.73 2.71 4.72 5.40 6.67 6.64 6.06 6.15 6.42 

(lakh ha) 23.6 27.47 23.02 17.33 14.91 15.98 15.36 15.63 15.09 

Total: Non Food % 36.48 41.42 33.66 27.83 28.72 30.06 26.08 25.91 25.83 

GCA (lakh ha) 64.7 66.32 68.38 62.26 51.91 53.16 58.89 60.33 58.43 

Source: Tamil Nadu Economic Appraisal (Various Years). 

Groundnut, Sugarcane and Cotton are important commercial crops. Millets (Jowar 

and Bajra) and pulses are important food grain crops. These crops account for about 54 

percent of gross cropped area (GCA). Rice is the stable food for the people and its 

dominant in the crop mix had remained steady except in years like 1990-91 when supply 

119

of Cauvery water was delayed (Planning Commission, 2005). Supply of fine rice in PDS 

has encouraged people to change their consumption habit from other cereals to rice, 

contributing to significant reduction in area under millets (from 13.4 lakh hectares in 

1980-81 to 6.99 lakh hectares in 2006-07). Areas under pulses and groundnut have 

remained more or less the same except in 1990-91 when their areas increased 

substantially due to decline in rice area. 

Sugarcane area increased from 1.8 lakh hectares to 3.9 lakh hectares during the 

period 1980-81 to 2006-07, due to the establishment of several sugar mills in the state. 

There has been a continuous decline in the area under cotton crop. One important trend 

observed in the last decade is that horticulture development has gradually moved out of 

its rural confines to urban areas and from “traditional” to “hi-tech”. Thus, horticulture 

assumes great importance as it provides a remunerative means for diversification of land 

use, improving productivity of land and increasing farm income. Currently about 16 

percent of GCA are utilized for horticulture. 

It is noted that the GCA has shrunk from 64. 7 lakh hectares in 1980-81 to 58.43 

lakh hectares in 2006-07, a fall of 6.27 percentage points. This needs attention because 

the number of workers dependent on agriculture increased from 12.6 million in 1981 to 

13.8 million in 2001. It has significantly increased the man/land ratio. By improving the 

productivity of the crop, we can protect the per capita income of farmers. 

b. Productivity of Crop 

During 1980-81 to 2006-07, the productivity of all crops (listed in Table 5.19) increased. 

Rice productivity increased significantly from 1865 kilograms (kg.) to 3423 kg., groundnut 

productivity from 860 kg to 1981 kg, and cotton yield increased from 200 kg to 374 kg. 

The productivity of sugarcane, fruits, vegetables, pulses also increased marginally over 

time (Table 5.19). Thus improvements in crop yields compensated the loss in area 

cultivated. It may be noted that as compared to the 2000-01 level, the productivity of 

rice declined substantially in 2003.04. Thereafter, it started increasing, but still it is lower 

than 2000-01 level. 

120

Table 5.19: Productivity (Yield) of Major Crops in Tamil Nadu 

(Kilograms) 

Crops 1980-81 1990-91 2000-01 2001-02 2002-03 2003-04 

2004- 2006-07 

05 2005-06 

Paddy 1865 3116 3541 3196 2359 2308 2703 2541 3423 

Jowar 790 1010 923 866 660 612 669 732 999 

Bajra 840 1080 1318 1223 869 1085 1273 1157 1511 

Pulses 324 425 454 395 356 375 367 337 540 

Total: Food Grains 2461 2228 1598 1520 1870 1844 2610 

Sugarcane* 101.5 100.8 116 116 106 102 110 105 123 

Vegetables - - 26.97 26.39 22.22 24.47 29.34 28.12 n.a 

Fruits - - 17.98 19.1 18 16.33 19.06 22.4 n.a 

Total: Horticulture - - 13.56 13.75 11.8 12.06 14.7 14.73 n.a 

Cotton 200 290 316 238 188 213 244 260 374 

Groundnut 860 1220 1942 1885 1429 1552 1632 1775 1981 

Source: Tamil Nadu Economic Appraisal (Various Years); * in tonnes. 

Tamil Nadu’s rice productivity declined over the years while the India’s average 

rice productivity increased. Still the rice productivity of Tamil Nadu (3425 kg) is higher 

than that of India (2133 kg.). In fact, Tamil Nadu obtained first rank in rice productivity 

in 2000-01 with the average yield level of 3540 kg per hectares. But in 2006-07, it ranked 

second after Punjab (Table 5.20). 

Table 5.20: State-wise Yield Rates: Paddy, Sugarcane, Cotton and Groundnut 

(Kilograms) 

States Paddy Sugarcane Cotton Groundnut 

2000-01 2006-07 2000-01 2006-07 2000-01 2006-07 2000-01 2006-07 

Andhra Pradesh 2936 2982 75905 83423 280 408 1091 556 

Assam 1495 1333 36590 35333 -- - -- NA 

Bihar 1475 1485 42650 45846 -- - -- 67 

Gujarat 810 1904 71440 74429 120 638 395 814 

Haryana 2559 3240 57130 68429 424 486 1000 NA 

Karnataka 2520 2464 102910 86879 260 238 799 500 

Kerala 2162 2423 81060 88000 280 NA 754 760 

Madhya Pradesh 570 825 22170 46833 80 192 1023 950 

Maharashtra 1277 1680 83340 74829 100 272 1000 889 

Orissa 1041 1533 57380 63500 275 371 794 1125 

Punjab 3506 3870 64210 60200 430 731 1000 1000 

Rajasthan 940 2398 41580 126000 270 350 920 1333 

Tamil Nadu 3540 3425 105250 105436 320 270 1940 1980 

Uttar Pradesh 1976 1878 54720 59533 150 NA 835 700 

West Bengal 2287 2592 67850 63500 -- - 1471 1302 

All India 1916 2133 68580 69033 190 421 952 865 

Source: Tamil Nadu Economic Appraisal (Various Years). 

121

Table 5.20 also shows that Tamil Nadu ranks first in terms of productivity of 

groundnut and second in the productivity of sugarcane. However, it compares poorly with 

many states and all India in cotton productivity. This could be one of the reasons why 

area under this crop declined over the years. Evidence indicates considerable yield gap 

between on-farm trials and actual farm practices. Table 5.21 shows that the yield gap is 

substantially high in almost all important crops. 

Table 5.21: Yield Gap: Major Crops 

(Kg/ha) 

Crop 

Yield Gap 

Paddy 725 

Cholam 2992 

Ragi 2223 

Red gram 833 

Black gram 881 

Groundnut 369 

Sugarcane 37000 

Cotton 304 


c. Irrigated Crop Area 

Area under crops irrigated and percentage of it to the sown area are shown in Tables 

5.22 and 5.23. 

Table 5.22: Crop-wise Area Irrigated 

(in ‘000 hectare) 

Crop 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 

Paddy 1937 1921 1375 1262 1732 1906 1796 

Jowar 40 32 27 20 30 30 19 

Bajra 16 15 10 7 7 7 5 

Other Cereals 73 65 63 69 73 74 80 

Total: Cereals 2066 2033 1475 1358 1842 2017 1900 

Pulses 60 51 37 42 32 29 22 

Sugarcane 315 321 261 192 222 335 391 

Other food crops 317 317 257 265 297 331 342 

Total Food Crops 2792 2751 2055 1887 2419 2732 2679 

Groundnut 241 218 157 172 198 190 157 

Cotton 65 59 26 44 58 44 38 

Others 392 385 384 375 412 430 435 

Total: Non-food 698 662 567 591 668 664 630 

Total Area Irrigated 3490 3413 2622 2479 3087 3397 3309 

Source: Tamil Nadu Economic Appraisal (2005-06). 

122

Only rice and sugarcane received irrigation in more than 90 percent of area 

sown. These are wet land crops raised with assured irrigation. These crops registered 

high yields, indicating that irrigation is a decisive factor for the adoption of fertilizer based 

technology. Pulses, cotton and groundnut dry land crops are receiving irrigation only in 

less than 30 percent of their areas. 

Table 5.23: Percentage of Area Irrigated under Crops 

(Percent) 

Crops 2000- 

01 

2001- 

02 

2002- 

03 

2003- 

04 

2004- 

05 

2005- 

06 

2006- 

07 

Paddy 93.13 93.25 90.64 90.34 92.47 92.98 93.01 

Pulses 8.72 7.45 6.57 7.82 5.42 5.52 4.10 

Sugarcane 100.00 100.00 100.00 100.00 100.00 100.00 100.00 

Total Food Crops 61.55 61.23 55.54 50.75 55.57 61.12 61.81 

Cotton 38.24 35.98 34.21 44.90 44.96 40.00 38.00 

Groundnut 34.48 32.88 31.27 29.05 32.14 30.69 30.91 

Total: Non-food 30.32 38.20 38.03 36.98 43.49 42.48 41.75 

Gross Cropped area 51.04 54.82 50.51 46.63 52.42 56.31 56.63 

Source (Basic Data): Tamil Nadu Economic Appraisal 2005-06. 

d. Fertilizer Consumption in Tamil Nadu 

Tables 5.24 and 5.25 provide a comparison of consumption of fertiliser in per hectare 

terms in Tamil Nadu over time and in comparison to other major states. Looking at the 

figures for 2005-06, it is clear that per hectare consumption of fertilisers is relatively high 

in Tamil Nadu as compared to other states. Only Andhra Pradesh, Haryana and Punjab 

show higher consumption in per hectare terms. Comparison over time indicates that per 

hectare consumption of fertilisers in Tamil Nadu has varied considerably from year to 

year. During the period 1998-99 to 2006-07, it has varied in the range of 118 kg per 

hectare to 187 kg per hectare. 

Table 5.24: Fertilizer Consumption in Tamil Nadu 

Years 1998- 

99 

1999- 

00 

2000- 

01 

2001- 

02 

2002- 

03 

2003- 

04 

2004- 

05 

2005- 

06 

2006- 

07 

Consumption 9.50 10.52 9.63 9.38 7.43 7.03 11.39 10.99 11.25 

(Lakh 

Tonnes) 

Per hectare 

Consumption 

(Kilograms) 

145 160 145 148 118 115 159 184 187 

Source: Tamil Nadu Economic Appraisal 2006-07. 

123

Table 5.25: Estimated Per Hectare Consumption of Fertilizers in Major States 

States 2003- 

04 

2004- 

05 

2005- 

06 

States 2003- 

04 

2004- 

05 

2005- 

06 

Andhra Pradesh 145.26 158.57 203.61 Haryana 161.74 155.10 166.72 

Karnataka 78.82 99.51 117.34 Punjab 190.13 194.56 210.06 

Kerala 64.20 56.74 57.00 Uttar Pradesh 126.69 134.13 140.37 

Tamil Nadu 114.54 159.07 183.67 Uttaranchal 104.75 88.93 94.24 

Gujarat 94.68 99.49 111.07 Bihar 88.02 99.78 125.32 

Madhya 

Pradesh 51.64 53.42 47.13 Jharkhand 54.46 62.10 67.61 

Chhattisgarh 44.23 65.19 67.36 Orissa 37.07 51.59 57.33 

Maharashtra 64.27 74.68 84.52 West Bengal 114.14 129.73 127.50 

Rajasthan 37.44 31.33 36.29 Assam 47.54 41.25 49.26 

Source: Tamil Nadu Economic Appraisal 2005-06. 

5.5 Summary 

Water, land and agriculture have strong linkages with poverty reduction. Most poor 

particularly in the rural areas, rely heavily on natural resources-land, and water and 

agriculture for their livelihood. Therefore, meeting MDGs will depend in large part as to 

how the State manages its scare water resources and how it develops effective water 

governance and improved water supply services. Policies relating to land redistribution 

and transfers will also play a crucial role. The key issues and challenges relating to water, 

land and agriculture may be highlighted as follows: 

i. Tamil Nadu is a water scare state with per capita water availability of 900 cubic 

meter (cm) as against the all India average of 2200 cm. The total water resource 

of the state is 42.23 billion cm (surface water 24.1 bcm and groundwater 23.1 

bcm) and the total water demand already exceeds the availability and the 

deficiency is 307.8 thousand million cubic feet. Agriculture is the largest user 

(above 90 percent) of water. 

ii. 

Most of the water canals are old and have poor efficiency due to seepage, silting in 

the canals, and poor maintenance. Roughly 2 percent of revenue expenditure of 

the State is spent on irrigation and only 10 percent of it is spent on maintenance 

works. The maintenance expenditure is below the norm recommend by the Ministry 

of Water Resources leading to rapid deterioration of surface irrigation. 

iii. The share of tank irrigation has declined due to siltation and encroachments in tank 

beds, damaged sluices, weirs and bunds. Further, the rate of extraction of 

groundwater exceeds recharge rate in many parts of the state. 

124

iv. There are severe water quality problems in several basins due to industrial 

pollution and agricultural waste (fertilizer and pesticides). In recent years, the State 

has passed the Ground water Regulation and Management Act and also enacted an 

important legislation to require rainwater harvesting system in all buildings to 

recharge the groundwater and arresting sea water intrusion. 

v. Nearly 66 percent of rural habitants are fully covered by rural water supply. Of 718 

urban towns, only in 19 municipal towns the water supply is poor (less than 50 litre 

per capita per day) and in 10 towns it is poor (less than 40 litre per capita per 

day). It is estimated that a capital investment of Rs. 1932 crore is required to 

provide access to safe drinking water to all households in the state. 

vi. Current land distribution and use in Tamil Nadu reflects centuries old policies of 

settlement and cultivation. Due to land ceiling policy and land to tiller, very large 

farms disappeared and the average farm size is 0.89 hectare. About 97 percent 

holdings are smaller than 4 hectates each. The small holding size sets the limit for 

investment in farm assets/modern inputs. 

vii. Of the total land area of 13 million hectares, forest accounts for 16 percent (as 

against the environmentally desirable norm of 33 percent). Area under current 

fallow and other fallow is increasing. About 13 percent of area is designated as 

wasteland. Reclamation of cultivable waste/fallow land will be essential to increase 

the area under cultivation. 

viii. Paddy is still the dominant crop accounting for 32 percent of gross cropped area. 

Sugarcane and groundnut are important commercial crops. Horticulture is raised in 

16 percent of gross area. Although the State compares well in term of productivity 

of many crops with other major states, the productivity of many of these has 

declined over time. Evidences indicate the presence of yield gap in many major 

crops. 

ix. Agriculture is still a dominant private sector providing livelihood for more than 50 

percent of people. About 3 million are landless agriculture labourers. The labour 

productivity in this sector is about 5 times as low as that in tertiary sector. The 

Government implements a scheme of distributing two acres of Wasteland to 

Landless Poor Agricultural Laborers. 

125

Managing and developing water resources, in the context of its heavy demand 

from agriculture as well as industry and providing drinking water of acceptable quality 

and adequate quantity are of critical importance for an MDGs-based strategy of poverty 

reduction in Tamil Nadu. 

In the following Chapter we look at strategies to bring in the marginalized 

sections of the society who have been by passed by the process of growth and targeting 

of the various measures to uplift these magninalies population. 

126

Chapter 6 

LAST MILE REACH STRATEGIES 

While economic growth uplifts some of the existing poor above the poverty line and 

reduces the depth of poverty for the remaining poor, there still remains a section of the 

poor who are bypassed by the growth processes or get only marginal benefits. Their 

ability to participate and benefit from the broad macro forces and fiscal interventions 

including education and health is constrained due to access costs, participation barriers, 

and other initial disadvantages. For this section of population, inclusion and reach has to 

be brought out by specially designed policy interventions. In this Chapter, we look at 

issues of improving allocative efficiency by reorienting allocations to the neediest and 

most disadvantaged districts and blocks and/or sections of society so as to augment the 

poverty-reducing impact of a large number of specialised programmes. This Chapter 

discusses strategies to maximize the benefits of the plethora of central and centrally 

sponsored schemes at the state level. 

Economists who favour using targeting of selected expenditure programmes 

argue that attempts to identify the poor and targeting benefits to them can serve 

important re-distributive and safety net roles in a market economy (World Bank, 1990; 

Lipton and Ravallion, 1995). Grosh (1995, p. 465) has observed: “targeted programs 

have much more incidence than general price subsidies”, and (p. 466): “on an average 

targeted programs also have more progressive incidence than public primary health and 

public primary education services, although there is a good deal of overlap in the 

ranges”. 

Chaudhuri and Ravallion (1994) from their study of longitudinal data on 103 

households in three villages over 1976-1983 with a view to deriving implications for 

targeting in the case of the chronically poor, arrived at the following conclusions: 

i. Current income generally dominates all other measures for all budgets in 

identifying the chronically income poor. At low budget levels it is also better at 

identifying those who are chronically poor in terms of their mean consumption. 

ii. 

At the lower end of the budgets considered, current food expenditure per person 

is worse than any of the other consumption or income measures. But at the 

upper end it performs better than most. 

127

iii. Even for the relatively good cross-sectional indicators, step-wise targeting based 

solely on cross-sectional data is significantly more costly than perfect targeting 

in achieving any given impact on chronic poverty. 

iv. While there is some variation from year to year, there is no obvious pattern, such 

as between ‘good’ and ‘bad’ agricultural years. This does not bear out the 

finding of Lanjouw and Stern (1991) that current income in a good agricultural 

year is a better indicator of chronic poverty than in a bad year. 

The last mile reach strategies can attempt to focus the benefit of public 

expenditure to the poor by identifying them as direct beneficiaries, screening out 

unintended beneficiaries as well as by dovetailing the programmes to suit the specific 

needs of the targeted populations. Last mile reach strategies involve identification of the 

potential beneficiary and the administration of the benefit. These strategies refer to 

strategies for targeting, allocation of funds or benefits, and conversion of funds or 

benefits into outcomes aimed at achieving the MDGs. 

6.1 Targeting Strategies 

a. Methods of Targeting 

A number of alternative methods of targeting can be identified, as discussed below: 

a1. Individual Assessment Mechanism 

In this mechanism, each potential beneficiary has to be examined separately to assess 

whether he is a bonafide applicant on the basis of various criteria, to receive the benefit 

of the programme. 

a2. Group Assessment 

In this case, an eligible group is decided on the basis of special characteristics, e.g., 

school lunch programmes that operate only in poor areas, programmes that 

predominantly benefit chosen states, districts, blocks, neighbourhoods based on relevant 

characteristics. 

a3. Geographic Targeting 

The main attraction of geographic targeting is its simplicity. Regions can be assigned 

priority on the basis of existing aggregate data. The complicated administrative 

mechanisms or means test for selecting beneficiaries individually are not required in the 

case of geographic targeting. Many Latin American countries have attempted geographic 

128

targeting as a device to improve effects of poverty programmes. Ravallion (1992) and 

Datt and Ravallion (1993) have investigated the potential of geographic targeting for 

India (and Indonesia) through a model designed to minimize poverty. Results for both 

the countries indicate that the qualitative effect of reducing regional disparities in 

average living standards generally favours the poor. The overall maximum impact for 

India was equivalent to what could be achieved by a uniform, untargeted transfer of 1.5 

percent of mean consumption. Based on simulation exercises, Baker and Grosh (1994) 

also examine geographic targeting. Their findings indicate that as compared to 

generalised food subsidy programme, the accuracy of geographic targeting is much 

better. 

a4. Self-targeting Mechanisms 

Self-targeting involves relying on the individual decisions of a potential beneficiary to 

participate in the programme. The programme is decided in such a way as to discourage 

the non-poor from using it. Self-selection as a method of targeting has been recognised 

as one of the best. There are two main caveats about self-targeted schemes. First, they 

screen participants by imposing a cost on them. Good schemes ensure that the cost is 

higher for the non-poor than the poor. But, the cost may be significant for the poor also 

including the cost of forgone income. 

b. Targeting Errors 

It is generally recognised that there are two types of errors in targeting expenditures for 

poverty alleviation: type I and type II. Type I error is an error of omission of the poor 

from the scheme, and type II error is the error of inclusion of non-poor in the scheme. 

Cornia and Stewart (1995) have referred to these errors as the F-mistake and the E- 

mistake. The F-mistake is the failure in the prime objective of intervention. The E-mistake 

is that of excess coverage. If the total population is N, and the target (poor) population is 

P, the two types of mistakes can be indicated as in Table 6.1. 

Table 6.1: Classification Matrix: E- and F-Mistakes 

Population Covered Poor Non-Poor Total Population 

All covered by programme P c NP c 

N c 

All not covered by programme 

Source: Cornia and Stewart (1995). 

P nc 

(E-mistakes) 

NP nc 

N nc 

(F-mistakes) 

P NP N 

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Cornia and Stewart argue that the two types of error should be viewed 

asymmetrically. In particular, the F-mistake should be viewed as far more serious than 

the E-mistake. Often, minimising the E-mistake can increase the F-error. On the other 

hand, there could be programmes, where, in order to minimise the F-error, a very large 

E-error might be committed. Such errors would inevitably lead to very high cost of 

programmes of poverty alleviation. The F and E errors are usually measured as a 

proportion of total population or as proportion of total poor population. Thus: 

F-error = P nc /N or P nc /P 

E-error = NP c /N or NP c /NP 

Some of the important conclusions derived by Cornia and Stewart from the 

studies that they reviewed may be listed as follows. 

i. Universal schemes tend to involve significant E-mistakes. 

ii. 

Universal unrestricted subsidies can sometimes provide much larger absolute 

benefits to richer than the poorer groups, since the richer groups can afford to 

consume more. 

iii. In a number of countries, targeted schemes have replaced universal schemes. In 

almost every case, the result has been a major increase in F-mistakes. 

iv. Administrative costs are estimated to be higher for the targeted food 

interventions; they range from 2 to 5 percent of the total costs of these 

schemes. 

v. The political support for general schemes that reach some of the non-poor 

appears to be higher than for the more narrowly targeted schemes. 

c. Costs of Targeting: Some Empirical Results 

The main cost of targeting is the administrative costs that need to be incurred both in the 

process of screening or identifying the poor, that is, the potential beneficiary, and the 

cost of delivering the benefit to them. Subsequently, there may be monitoring and followup 

costs, as for example, in recovering a subsidized loan. In estimating targeting costs, 

Grosh (1995) distinguishes between total administrative costs and targeting costs. Total 

administrative costs (TAC) are defined as covering all costs necessary to deliver the 

targeted benefit. Only a part of these are called “targeting” costs (TC) that are incurred 

during the screening process that determines as to who benefits. Estimates by Grosh 

indicate that total administrative costs (including the costs of screening potential 

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eneficiaries and of delivering programme benefits to them) ranges from 0.4 to 29 

percent of the total programme costs in the case of individual assessment mechanism. 

For self targeting, it ranges from 3 to 10 percent of total programme costs. Estimates of 

the administrative costs for different mechanisms are summarised in Table 6.2. 

Table 6.2: Cost of Alternative Targeting Mechanisms 

(As percent of total cost of programme) 

Details TAC Median 

Individual Assessment 0.4 to 29 9 

Geographic Targeting 4.0 to 16 7 

Self Targeting 3.0 to 10 6 

Source: Grosh (1995). 

Administrative costs vary greatly by programme type. Screening costs have a 

small share in TAC. In the light of these results, Grosh (1995) draws three main 

conclusions: 

i. Targeted programmes have much larger progressive incidence than general food 

price subsidies. They even have somewhat more progressive incidence than 

scarce public health and educational services. 

ii. 

The administrative costs of programmes with moderate good incidence need not 

be excessively high. 

iii. 

It is not possible to rank targeting mechanism a priori. There are no broad 

correlations between the targeting mechanism and targeting outcomes, and 

there appears to be a weak correlation with administrative costs. 

6.2 Role of BPL Surveys in Targeting 

The BPL Census (2002) in India for rural areas used thirteen indicators. It was argued by 

analysts (e.g. Sundaram, 2003) that these thirteen indicators have no clear link with 

deprivations in either the capability space or in regard to consumption of goods and 

services serving as proxies for such deprivations. Secondly, the procedure of simple 

aggregation of scores effectively implies cardinal equivalence across what are essentially 

ordinal rankings of alternative states of households in respect of individual indicators. 

Sundaram (2003) observes ‘…. in fact, in seeking to combine in a single measure from 

several facets of deprivation, the notion of a hierarchy of basic needs is abandoned. 

There could be absurd situation of a score of zero for non-ownership of any consumer 

131

durable seen as an extreme deprivation at par with ‘having less than one square meal per 

day for major part of the year’. 

Further, the ranking on the aggregate score of rural households is not needed for 

programmes addressing deprivations that are universal in scope like illiteracy, lack of 

sanitation, and safe drinking water. The ranking is not relevant for key employment 

programmes (JGSY and EAS) that are focused on locations of need and not at individual 

households. The ranking does not matter for programmes like Antyodaya and 

Annapoorna. In a recent study, Jalan and Murgai (2006), by mapping of BPL criteria to 

NSS data, find that the BPL identification methodology is a weak mechanism for 

identifying the poor. Table 6.3 reports the extent of under-coverage in the BPL 

classification at the state-level estimated by them. One key findings of their study is that 

the BPL score misclassifies nearly half (49 percent) of the poor as non-poor, and 

conversely, 49 percent of those identified as BPL poor are actually non-poor. 

Jalan and Murgai argue that the targeting errors of the BPL design imply large 

welfare losses, both to households, and in terms of efficiency of public spending, which is 

based on the BPL mechanism. The problems of targeting across the distribution are also 

shown in Table 6.4 which reports poverty rates (expenditure based and BPL score based) 

and under-coverage and leakage rates by per capita expenditure classes. 

State 

Table 6.3: Poverty Rate and Targeting Errors in the 2002 BPL 

Classification, by State 

Rural 

Poverty 

Rate 99/00 

(percent) 

Share of Poor 

Misclassified as 

Non-poor by BPL 

Criteria 

(percent) 

State 

Rural 

Poverty 

Rate 

99/00 

(percent) 

Share of Poor 

Misclassified as 

Non-poor by 

BPL Criteria 

(percent) 

Andhra Pradesh 10.5 76.9 Madhya Pradesh 37.2 43.8 

Assam 40.3 41.6 Maharashtra 23.2 54.4 

Bihar 44.0 40.6 Orissa 47.8 32.1 

Gujarat 12.4 64.9 Punjab 6.0 72.4 

Haryana 7.4 73.8 Rajasthan 13.5 63.8 

Himachal 

Pradesh 

7.5 74.5 Tamil Nadu 20.0 64.5 

Karnataka 16.8 64.2 Uttar Pradesh 31.1 51.9 

Kerala 9.4 72.6 West Bengal 31.7 46.3 

All India 26.8 49.1 

Source: Jalan and Murgai (2006), based on NSS 55 th round. 

Note: Rural poverty rates use official Planning Commission state-specific rural poverty lines. 

132

In the nighbourhood of the poverty line (i.e., the third decile), the BPL indicator 

misclassifies 62 percent of the poor as BPL non-poor and 33 percent of the non-poor are 

classified as poor. In the poorest decile, a large share of the population (around 37 

percent) is incorrectly classified as being non-poor. Targeting errors in the richer 

expenditure classes are, by comparison, marginal. 

Table 6.4: Poverty Rate and Targeting Errors in the 2002 BPL 

Classification, by Expenditure Class 

Poverty Rate 

Targeting Errors 

Expenditure Class Expenditure BPL Score Undercoverage 

Leakage 

Based 

Based 

Poorest 10 % 100.0 63.2 36.8 --- 

2 nd decile 100.0 47.6 52.4 --- 

3 rd decile 69.7 36.2 62.2 27.3 

4 th decile 0.0 31.9 --- 100.0 

3 rd quintile 0.0 23.0 --- 100.0 

4 th quintile 0.0 14.3 --- 100.0 

Richest 20 % 0.0 8.0 --- 100.0 

Total 27.0 27.0 49.1 49.1 

Source: Jalan and Murgai (2006), based on NSS 55 th round. 

Note: Leakage is the percentage of the BPL poor that is actually (expenditure-based) non-poor. 

These findings indicate that the BPL Census should be used for targeting 

programmes with adequate caution. In particular, targeting strategies should be 

developed separately for different objectives like income, health, education, and gender. 

6.3 Targeting Strategies for Tamil Nadu 

In Tamil Nadu, distribution of funds/benefits among districts, for various central, centrally 

sponsored, and state schemes follow a variety of criteria. Often these are ad-hoc. A fourstage 

targeting strategy of (a) districts ranked in order of deficiency separately for 

different goals (income-deficiency, health, education, and gender objectives), (b) 

blocks/urban agglomerations, and (c) wherever the discretion is with the state 

government or district officials would improve outcomes. 

a. First Stage: Districts 

The first stage of targeting involves ranking of district in order of deficiency. This is most 

straightforward as data on levels of achievement are available. 

b. Second Stage: Rural: Blocks; Urban: Cities/Towns 

Within the district, allocation of funds should be done block-wise for rural areas and in 

proportion to urban poor in total urban poor in the urban segments. 

133

c. Third Stage: Rural: Villages; Urban: Zones/Wards/Slums 

Within the block, allocation of funds should be done villages or groups of villages again in 

proportion of total beneficiary population. Gram Panchayats should decide through Gram 

Sabha: 

i. Given their entitlement, what schemes (central and centrally sponsored) they 

would like to administer, and 

ii. 

Village level schemes should be administered by them. 

For schemes that have individual beneficiaries, the beneficiaries may be identified 

by the Gram Panchayat by looking at SC/ST/Antyodaya/ agricultural landless 

labourers/single parent households. First priority may be given to families at the intersection 

of any two criteria, i.e., households that satisfy at least two criteria. 

d. Fourth State: Households/Individuals 

There is a major need to improve household level targeting separately for urban and 

rural areas. The preferred method for such an exercise should be to use the NSS data to 

generate a set of indicators that provide more targeting power and which could be easily 

verifiable at reasonable cost. As far as possible, composite indices should not be used. 

Instead separate indicators for different aspects like health, education, income, and 

gender issues should be used for different programmes. It will be useful to supplement 

the listing in BPL Census by additional information. At the village level, the Gram 

Panchayat may offer the best information. In urban areas this may be more difficult. And 

NGOs may have a significant role in providing the needed information. For schemes that 

have individual beneficiaries, the beneficiaries may be identified by the Gram Panchayat 

by looking at SC/ST/Antyodaya/ agricultural landless labourers/single parent households. 

First priority may be given to families at the inter-section of any two criteria, i.e., 

households that satisfy at least two criteria. 

6.4 Central and Centrally Sponsored Schemes 

a. Major Centrally Sponsored Schemes 

A number of central and centrally sponsored schemes, aimed at one or the other 

dimension of deprivation (income, health, education, and gender), have evolved over 

time. These schemes are characterized by many short comings relating to (1) multiplicity 

schemes for similar or comparable objectives, (2) faulty allocation among states, (3) bypassing 

state governments in administering these schemes, and (4) implementation 

134

inefficiencies. Some of the major centrally sponsored schemes, particularly affecting the 

rural poor, are listed in Table 6.5. 

Table 6.5: Some Major Central and Centrally Sponsored Poverty Reduction Schemes 

Income Generating Schemes Asset Generating 

Other Schemes 

Schemes 

National Rural Employment Bharat Nirman 

Aam Admi Bima Yojana (AABY) 

Guarantee Scheme (NREGS) 

Swarna Jayanti Gram Swarozgar Pradhan Mantri Gram Rajeev Gandhi Gram Vidyutikaran 

Yojana (SJGSY) 

Sadak Yojana (PMGSY) Yojana (RGGVY) 

Sampoorna Grameen Swarozgar Indira Awas Yojana (IAY) 

Yojana (SGSY) 

National Old Age Pension Scheme 

(NOAPS) 

Some of the major schemes aimed at providing health and education services are 

listed in Table 6.6. 

Table 6.6: Schemes for Health, Education, and Safe Drinking Water 

Health Education Water 

Sarva Shiksha Abhiyan (SSA) 

National Programme of Mid-day 

Meals in Schools (Also impacts on 

education) 

Rashtriya Swasthya Bima Yojana 

(RSBY) 

Universal Immunization 

Programme 

Pulse Polio Immunization 

Programme 

National Programme for Education of 

Girls at Elementary Education 

(NPEGEL) 

Kasturba Gandhi Balika Vidyalaya 

(KGBV) 

Scheme for Universalisation of 

Secondary Education 

Rajiv Gandhi National Drinking 

Water Mission (RGNDWM) 

National Vector Borne Disease 

Control Programme 

Revised National Tuberculosis 

Control Programme 

National Aids Control Programme 

Some of the major national schemes some Tamil Nadu schemes are briefly 

discussed below: 

a1. Midday Meal Scheme: Universal Coverage 

The National Programme of Mid-Day Meals in Schools covers approximately 9.70 crore 

children studying at the primary stage of education in 9.50 lakh schools. The programme 

was extended, with effect from 1.10.2007, to children in the upper primary stage of 

education (classes VI-VIII) in 3479 Educationally Backward Blocks (EBBs). The 

programme provides a mid-day meal of 450 calories and 12 grams of protein to children 

at the primary stage. For children at the upper primary stage, the nutritional value is 

135

fixed at 700 calories and 20 grams of protein. Adequate quantities of micro-nutrients like 

iron, folic acid and vitamin-A are also recommended under the programme. To meet the 

nutritional norm, the Central Government provides foodgrain at 100 grams per primary 

school child/school day and 150 grams per upper primary school child/school day. In 

2007-08, Central Government also approved the inclusion of Inflation Adjusted Index 

(Consumer Price Index) for calculation of Central assistance towards cooking cost once in 

every two years. This will be applicable from 2008-09 for primary and upper primary 

stages. 

The midday meal feeding program in schools has expanded rapidly in the past 

decade. Tamil Nadu was the first state to launch such a scheme. A major expansion 

came after 1995. It was strengthened further in 2001. While cooked mid-day meals were 

mandated from 1995 (with two years given to put the system in place), they remained 

the responsibility of states until 2001. In 2001, following a Supreme Court order, states 

were mandated to provide the meal with minimum calorific content in all government and 

aided primary schools. The scheme receives budgetary support from the central 

government as a CSS. The central government bears the cost of the grain and its 

transportation. States are responsible for implementation, cooking infrastructure, and 

provision of cooks. 

a2. Sarva Shiksha Abhiyan 

The Sarva Shiksha Abhiyan (SSA) is being implemented in partnership with States to 

address the needs of children in age group of 6-14 years. The overall objective of SSA is 

to support the resource needs of the states in ensuring universal access, enrolment and 

retention, and improving the quality of elementary education. India-wide, the 

achievements under SSA up to September 30, 2007, include construction of 170320 

school buildings, construction of 713179 additional classrooms, 172381 drinking water 

facilities, construction of 218075 toilets, supply of free textbooks to 6.64 crore children 

and appointment of 8.10 lakh teachers besides opening of 186985 (till 31.3.07) new 

schools. About 35 lakh teachers receive in-service training each year. 

SSA is implemented by the state education department machinery to execute the 

district-level plans. The resources allocated under the SSA programme are additionality to 

the budgetary expenditure on elementary education by the state government. The funds 

for the SSA programme are channeled through the District Implementation Societies, 

under a 75:25 central and state sharing arrangement. Apart from the state's 

contribution, the rest of the SSA funds are not captured in the state budget. 

136

Tamil Nadu is close to achieving universal elementary education in terms of both 

enrolment and completion. It has to focus on putting all out-of-school children into 

formal education and reduce the dropout rate in primary and upper primary education. 

Construction and upgrading of existing school facilities in terms of classrooms, drinking 

water, and toilets are needed to provide adequate infrastructural support. This would 

also require appointment of teachers as per norms. There is a wide variation in the 

number of dropout children as well as in completion rates in elementary education across 

districts. For better targeting, the SSA outlay for backward districts should be enhanced 

and indexed to the index of deficiency. As the major civil works (a component of SSA - 

additional classrooms, school facilities, BRCs, CRCs) are completed, additional 

expenditure should focus on the relatively more deficient districts. Additional expenditure 

for universalisation may be calculated keeping in mind the deficiencies. 

In terms of allocative efficiency of funds aimed at education, at least those 

coming from the state budget should be allocated to the districts to ensure that the share 

of expenditure going to educationally less developed districts bears a high correlation 

with their needs. The difference in completion rate, for example, between the highest 

achieving districts (Dindigul) to the lowest (Nagapattinam) is nearly 35 percent. Although 

the magnitudes might be different, similar variation is seen in dropout and attendance 

rates as well. 

a3. Access to Secondary Education 

According to the child census of the Ministry of Human Resource Development (MHRD), 

there were 831532 children out of school in Tamil Nadu as of January, 2003. By 2006-07, 

this figure had come down to just over one lakh. This means a net addition of nearly 

three-quarters of a million children into elementary education stream over the last three 

years. While SSA commitment is to provide opportunities for elementary education until 

the age of 14, there has to be a long-term strategy to absorb the students completing 

elementary education into secondary and later higher education. 

Sen et. al (2008) note that the ratio of enrolment in secondary to elementary 

education is only about 0.27 in Tamil Nadu, which means that the secondary level at the 

current capacity can only cater to about 27 percent of the current primary level 

enrolment. Assuming there is no excess capacity in secondary schools, universal 

elementary completion and secondary transition rate, Sen et. al. show that in Tamil 

Nadu, an extra 2.3 million students will be in the secondary cohort (IX - XII) in 2009 -10. 

The current capacity can cater only to half of the age 7 to 11 cohort, which was in 

137

primary school in 2002-03. They estimate at the same unit cost as elementary education 

(which maybe taken as the lower bound), the total expenditure to accommodate the 

number of students would be nearly Rs. 475 crore per year. The state government needs 

to plan ahead for the large increase in secondary school enrolment predicted in the next 

five years and correspondingly for education at higher (post-secondary) levels. 

This is a more general issue in the all-India context also. The major challenge 

before secondary education is that of meeting the surge in demand due to success of 

SSA. Also new schemes called Scheme for Universalisation of Access to Secondary 

Education (SUCCESS) is being launched during the Eleventh Five Year Plan. The main 

objective of the programme is to make secondary education of good quality available, 

accessible and affordable to all young students in the age group 15-16 years (classes IX 

and X). The target of the scheme is (i) universal access of secondary level education to 

all students in the age group 15-16 years by 2015, and (ii) universal retention by 2020. It 

envisages provision of (a) necessary infrastructure and resources in the secondary 

education sector, to create higher capacity in secondary schools in the country, and for 

improvement in quality of learning in the school, (b) filling the missing gaps in the 

existing secondary schools system, (c) extra support for education of girls, rural children 

and students belonging to SC/ST, minority and other weaker sections of the society, and 

(d) a holistic convergent framework for implementation of various schemes in secondary 

education. 

a4. National Programme for Education of Girls at Elementary Education 

This programme is aimed at enhancing girls’ education by providing additional support for 

development of a “model girl child friendly school” in every cluster with more intense 

community mobilization and supervision of girls’ enrolment in schools. Under National 

Programme for Education of Girls at Elementary Education (NPEGEL), 35252 model 

schools have been opened in addition to supporting 25537 Early Childhood Care and 

Education (ECCE) centres. Besides, 24387 additional classrooms have been constructed, 

and 1.85 lakh teachers have been given training on gender sensitization. Remedial 

teaching has also been provided to 9.67 lakh girls, apart from holding bridge courses 

covering 1.53 lakh girls and additional incentives like uniforms, etc. to about 71.46 lakh 

girls (up to October 31, 2007). 

a5. Swarnjayanti Gram Swarozgar Yojana 

The Swarnjayanti Gram Swarozgar Yojana (SGSY) was launched in April 1999 after 

restructuring the Integrated Rural Development Programme (IRDP) and allied 

138

programmes. It is the only Self Employment Programme currently being implemented for 

the rural poor. The objective of the SGSY is to bring the assisted swarozgaris above the 

poverty line by providing them income generating assets through bank credit and 

Government subsidy. The scheme is being implemented on cost sharing basis of 75:25 

between the Centre and States. Up to December 2007, 27.37 lakh self-help groups 

(SHGs) have been formed and 93.21 lakh swarozgaris have been assisted. 

a6. Bharat Nirman and Pradhan Mantri Gram Sadak Yojana 

Bharat Nirman programme, which was launched in 2005-06 for building infrastructure 

and basic amenities in rural areas, has six components, viz. rural housing, irrigation 

potential, drinking water, rural roads, electrification and rural telephony. 

The Pradhan Mantri Gram Sadak Yojana (PMGSY) was launched on December 

25, 2000 as a 100 percent centrally sponsored scheme with the primary objective of 

providing all-weather connectivity to the eligible unconnected habitations in the rural 

areas. The programme is funded mainly from the accruals of diesel cess in the Central 

Road Fund. In addition, support of the multilateral funding agencies and the domestic 

financial institutions is being obtained to meet the financial requirements of the 

programme. Up to December, 2007, about 142750 kilometre-long roadworks have been 

completed. 

a7. Indira Awaas Yojana 

Indira Awaas Yojana (IAY) scheme aims at providing dwelling units, free of cost, to the 

poor families of the Scheduled Castes, Scheduled Tribes, freed bonded labourers and also 

the non-SC/ST persons below the poverty line in rural areas. The scheme is funded on a 

cost sharing basis of 75:25 between the Centre and the States. 

a8. Universal Immunization Programme 

The coverage of the programme, first launched in the urban areas in 1985, was 

progressively extended to cover the entire country by 1990. Between 1988 and 2006, 

there has been a decline of 83 percent in diphtheria, 83 percent in pertussis, 59 percent 

in measles, 94 percent in neonatal tetanus and 97 percent in poliomyelitis. Hepatitis-B 

vaccination programme which was started in 2002 in 33 districts and 15 cities as a pilot 

has been expanded to all districts of good performing States. Vaccination against 

Japanese encephalitis was started in 2006. 

139

a9. Pulse Polio Immunization Programme 

This initiative includes use of Monovalent Oral Polio Vaccine (mOPV1 & mOPV3) in the 

high risk districts and States to enhance immunity against P1 and P3 virus, vaccinating 

the children in transit and covering children of migratory population from Uttar Pradesh 

and Bihar. Special rounds have been conducted in Haryana, Punjab, Gujarat and West 

Bengal during August, September, October and November 2007. 

a10. National Vector Borne Disease Control Programme 

The National Vector Borne Disease Control Programme (NVBDCP) is being implemented 

for prevention and control of vector borne diseases like malaria, filariasis, kala-azar, 

Japanese encephalitis (JE), dengue and chikungunya. Most of these diseases are 

epidemic prone and have seasonal fluctuations. Currently about 100 districts are 

identified as highly malaria endemic where focused interventions are being undertaken. 

To achieve NHP-2002 goal for Elimination of Lymphatic Filariasis by 2015, the 

Government of India initiated Annual Mass Drug Administration (MDA) with single dose of 

diethylcarbamazine citrate tablets to all individuals living at risk of filariasis excluding 

pregnant women, children below 2 years of age and seriously ill persons. During 2007, 

MDA has been observed in 19 States. The reported coverage of 19 States is 87.28 

percent. Kala-azar is endemic in 4 States of the country, namely Bihar, West Bengal, 

Jharkhand and Uttar Pradesh. However, about 80 percent of the total cases are reported 

from Bihar. 

a11. National AIDS Control Programme 

The HIV prevalence among high risk groups continues to be nearly 6 to 8 times greater 

than that among the general population. Based on the HIV Sentinel Surveillance data 

from the last three years (2004-06), districts have been classified into four categories. 

About 156 districts have been identified as category A where the HIV prevalence among 

ANC clinic attendees is greater than 1 percent and 39 districts have been classified as 

category B where HIV prevalence among high risk population has been found to be more 

than 5 percent. These districts are being given priority attention. 

a12. Some Tamil Nadu Initiatives 

There are number of specialised schemes for poverty reduction in rural areas introduced 

by the Tamil Nadu government. During the last two years of the Tenth Plan, a new 

scheme called Guaranteed Employment: Tamil Nadu Rural Employment Guarantee 

Scheme (TNREGS) for providing guaranteed employment for 100 days in a year to needy 

households was introduced in six districts of the state. It is now being extended to other 

140

districts in Tamil Nadu. Namadhu Gramam was one of the major schemes introduced by 

the Tamil Nadu government with a aim of community participation, collective decision 

making, and infrastructural development. Each panchayat is allocated funds under this 

programme and the panchayats are encouraged to widen the decision making base by 

involving all stake holders in the villages apart from elected representatives. 

The Government of Tamil Nadu has undertaken many development schemes 

exclusively through its budgetary support for infrastructural development and 

improvement in the living condition of people in rural areas. Member of Legislative 

Assembly Constituency Development scheme (MLACDS), Village Self Sufficiency Scheme 

(VSSS), Village Fair Development Scheme (VFDS) are some of the major schemes 

implemented under this head. 

Tamil Nadu Health Systems Project (TNHSP) includes provision of civil works and 

equipments for upgrading the secondary hospitals, supporting NGO based activities for 

improving tribal health, expanding the CEmONC network as well as projects for biomedical 

waste management and control of cervical cancer and cardiac disease. The total 

outlay proposed for TNHSP during the Plan period is Rs. 464.54 crore. 

b. State-wise Allocation in Centrally Sponsored Schemes 

State-wise allocations of the major centrally sponsored Schemes (CSS) are done using 

specific formulae criteria. For some of the major programmes, these are summarised in 

Table 6.7. 

Program 

PDS 

SGRY 

NREG 

SGSY 

IAY 

Table 6.7: Allocation Rules for Selected CSS 

Allocation Rule Across States 

Based on state rural and urban poverty rates for 1993-94 adjusted for 

population growth, and subsequent adjustment. 

Based on state rural poverty rates for 1993-94 adjusted for population 

growth and subsequent adjustment 

200 backward districts as defined by Planning based on merging of 

RSVY and NFFW districts, using ago productivity per worker, SC/ST 

share and casual agro- wage rates by district 

Based on state rural poverty rates for 1993-04 adjusted for population 

growth and subsequent adjustment 

50 percent on adjusted state rural poverty estimates and 50 percent 

on housing shortage 

NOAPS 50 percent of state-specific NSS poverty rate for population x over 65 

year’s population x over 65 years population by state. 

Source: Saxena (2006); Rajan (2004) for social pensions. 

141

While the general base for many schemes is the state poverty share, this is subject to an 

adjustment factor proposed by the Lakdawala Committee till the late 1990s, which 

ensured that the reduction in the anti poverty programme allocation of specific states did 

not fall by more than 15 percent from the previous allocation formula. The adjusted 

formulae is now used for SGSY, SGRY and IAY (the latter with an additional factor of 

housing shortage), and for targeted public distribution system (TPDS), both urban and 

rural poverty are taken in to account. The adjusted shares are given in Table 6.8. 

Table 6.8: Core Funding Shares by States for Rural Anti-poverty Programmes 

State Task Force 93-94 Expert Group 93-94 Adjusted Shares 

Andhra Pradesh 6.635 3.257 5.64 

Assam 1.513 3.866 3.222 

Bihar 19.265 18.476 18.476 

Gujarat 2.11 2.547 2.123 

Haryana 0.721 1.498 1.249 

Himachal Pradesh 0.272 0.631 0.526 

Jammu &Kashmir 0.191 0.781 0.651 

Karnataka 5.011 3.934 4.259 

Kerala 1.094 2.293 1.911 

Madhya Pradesh 11.018 8.859 9.365 

Maharashtra 9.905 7.922 8.419 

Orissa 7.59 5.774 6.451 

Punjab 0.262 0.728 0.607 

Rajasthan 2.665 3.88 3234 

Tamil Nadu 5.546 4.987 4.987 

Uttar Pradesh 20.365 20.333 20.333 

West Bengal 5.479 8.601 7.169 

NE and UTs 0.235 1.147 0.967 

Source: Source: Saxena (2006); Rajan (2004) for social pensions. 

Note: NE: Northeastern States; UTs: Union Territories. 

A number of central and centrally sponsored schemes are being administered by 

state and district level authorities covering income and employment schemes as well as 

health and education services. Table 6.9 gives, as an illustration, the share of funds 

allocated by different tiers of government and spent by different spending 

authorities/entities for one district of Tamil Nadu (Villupuram). It shows that state funds 

contribute about 45 percent of total funds allocated, and taluk (block) and village level 

authorities spend relatively the larger share of expenditure. 

142

6.5 Reaching Households and Individuals: Micro Level Policies 

While macro policies relate to growth of output, employment, inflation, and budgetary 

allocation to areas such as health, education, and other poverty related interventions, 

micro policies aim at individually targeted interventions. Two areas for micro 

interventions relate to micro credit and micro insurance. 

Table 6.9: Funds Received at District Level under Various Poverty Alleviation 

Schemes in 2004-05 

Name of Funds Allocated Spent By DRDA 

the Scheme Centr State Total Distric Taluk Villag NGOs Administ 

e 

t 

e 

ration 

SGRY 15.27 3.13 18.39 3.68 5.52 9.20 0.00 0.00 

SGSY 2.93 0.98 3.91 0.00 0.00 0.00 3.91 0.00 

IAY 7.14 2.38 9.52 0.00 0.00 9.52 0.00 0.00 

NFFWP 18.29 0.00 18.29 2.66 7.58 3.46 4.59 0.00 

PMGSY 4.16 0.00 4.16 0.00 0.00 0.00 2.51 0.00 

PMGSY GH 0.69 0.00 0.69 0.00 0.00 0.69 0.00 0.00 

IWDP 0.29 0.05 0.35 0.00 0.00 0.00 0.35 0.00 

MPLAD 4.43 0.00 4.43 0.00 3.76 0.00 0.65 0.02 

TSC 1.61 0.55 2.16 0.00 0.05 1.55 0.49 0.07 

BIO GAS 0.02 0.00 0.02 0.00 0.00 0.00 0.02 0.00 

DRDA Admn 0.37 0.12 0.49 0.00 0.00 0.00 0.00 0.49 

CSS Total 55.20 7.21 62.41 6.34 16.92 24.42 12.51 0.58 

State 

Schemes 

Nammadu 0.00 11.13 11.13 0.00 0.00 11.13 0.00 0.00 

Gramam 

SGRY 

0.00 4.09 4.09 0.30 2.28 1.52 0.00 0.00 

(Drought) 

SSS 0.00 1.55 1.55 0.00 1.55 0.00 0.00 0.00 

MLACDS 0.00 8.11 8.11 0.00 6.17 0.00 1.94 0.00 

HRP 0.00 0.34 0.34 0.00 0.00 0.00 0.34 0.00 

MRR 0.00 5.41 5.41 0.00 5.41 0.00 0.00 0.00 

Flood Relief 0.00 6.96 6.96 0.00 2.26 0.00 4.70 0.00 

States Total 0.00 37.59 37.59 0.30 17.67 12.65 6.98 0.00 

Grand Total 55.20 44.80 100.00 6.64 34.58 37.06 19.49 0.58 

Source: Sen et. al (2008) and District Rural Development Agency, Villupuram, Government of Tamil Nadu. 

143

a. Micro Credit 

Micro credit schemes have succeeded in a significant way in many countries. In India 

also, these are showing signs of success although the progress may be different in 

different states. Micro credit is extended to the poor without the need for collateral. It is 

based more on his participation in the self-help groups. Many banks are now entering this 

market seeing this as a viable marketing option. Micro credit directed to poor is 

considered as part of retail banking. The success of the Kisan Credit Card scheme, 

launched in 1998-99, is an important dimension of micro credit. Extension of this scheme 

to the informal sector is now being undertaken. 

The concept of Self Help Groups promoted by NABARD for financing the poor by 

formal institutions and non-formal institutions was started in 1991-92. The Swarnajayanti 

Gram Swaryojana (SGSY) facilitates credit linkage with banks for self help groups in rural 

areas. The Tamil Nadu government provides a subsidy in the form of Revolving Fund 

(RF) of an amount of Rs. 10000 per SHG. Correspondingly, the banks provide cash credit 

of up to Rs. 30000 per group. This scheme was earlier made applicable only to rural 

SHGs. But in 2006-07, Government of Tamil Nadu has implemented the RF subsidy 

scheme in urban areas also. In 2008-09, the scheme has been extended to all eligible self 

help groups, totaling to about 1.50 lakh in number. Total number of SHGs is 3.67 lakh of 

which 1.07 lakh are based in urban areas. The loan repayment rate is 99 percent. Every 

year, nearly 25000 new SHGs are being formed. Appendix Table 6.1 gives details of 

physical and financial achievements of self help groups in Tamil Nadu. 

b. Micro Insurance 

As discussed in Chapter 2, there is considerable volatility in agricultural prices. Farmers 

are exposed to large fluctuations in output as well as prices, which leads to variations in 

agricultural incomes. The element of uncertainty in agriculture is recognised to be far 

higher than that in other sectors. Analysts say that there are four key aspects to making 

the micro insurance of the poor a viable business proposition. These relate to 

affordability, insurability, marketability and profitability. The insurance costs and the 

related premium need to be kept low in order to ensure affordability. This is one aspect 

where government subsidies have also been recommended, either directly to the poor for 

insurance or indirectly to the company/organisation offering insurance. The second 

aspect relates to risks in insurance. Predictability of the risk is an important aspect in 

determining its insurability as well as the corresponding premium. For any poor, most 

risks are high and relate to many aspects of his life. To reduce risks and make the 

144

proposition more insurable, a group based approach rather than an individual based 

approach may reduce the costs of insurance. 

There are now a number of insurance and pension schemes although so far the 

approach has been uncoordinated. Table 6.10 presents a range of programs aimed at the 

unorganised sector, covering about 10 percent of the unorganized labour force for any 

given type of insurance. There is also a scheme for livestock insurance. This consists 

mainly of cattle insurance and is being implemented by the four public sector general 

insurance companies. Under various livestock insurance policies, cover is provided for the 

sum insured or the market value of the animal whichever is less. The animals are 

normally insured up to 100 percent of their market value. 

Table 6.10: Selected Insurance and Pension Programs for the Unorganised Sector 

Name of the Programme 

Estimated Type of Risk Covered 

Memberships 

Government 

Universal Health Insurance 1000 Health 

Central Welfare Funds (5)* 4500 (est) Health, education, housing, 

other 

Kerala Welfare Funds (55) 4900 Varies, all kinds 

Karnataka Labor Welfare Fund 675 Life, health 

Andhra Pradesh Labor Welfare Fund 1000 Life 

Tamil Nadu Construction Worker Welfare Fund 631 Life, health, pension, other 

Tamil Nadu Voluntary Health Service 125 Health 

Maharashtra Mahadi Workers Fund 150 Life, health, other 

West Bengal Provident Funds (2)*** 1800 Old age 

Non-governmental**** 

LIC - lBY Scheme 3570 Life 

UTI - Pension Scheme 100 Old age 

Yashivini - Karnataka 2100 Health 

Kamna Trust - Karnataka 14 Health 

Spandana 386 Life 

Shepherd 15 Life 

SEW A Gujarat 100 Life, health, pension, other 

People's Rural Health Promotion Scheme 75 

ASA 66 Life and health 

Sources: Rajan (2004); Roth et. al., (2005); LIC (2006); NCEUS (2006). 

Notes: * includes the beedi, mica, limestone, iron ore and cine workers funds. * memberships are double 

counted in some cases since both groups and providers are shown here. *** includes both urban and 

rural provident funds. **** list is not exhaustive and excludes, among others, life and health 

insurance for ICICI clients. 

A National Agricultural Insurance Scheme (NAIS) was introduced from Rabi 

season of 1999-00, which replaced the earlier Comprehensive Crop Insurance Scheme 

145

which was in operation since 1985. The new scheme extends coverage to all the food 

crops as well as oilseeds, commercial and horticultural crops. The premium rates vary 

from 1.5 to 3.5 percent of the sum insured depending on the crops. There are actuarial 

rates for the commercial and horticultural crops. Small and marginal farmers are entitled 

to a subsidy of 50 percent of the premium charged from them to be shared on 50:50 

basis by the central and the state governments. At present this scheme is being 

implemented by 21 states and 2 Union Territories. 

A Pilot Seed Crop Insurance Scheme was also introduced from the Rabi season of 

1999-00 to protect seed growers in the event of failure of a seed crop. This scheme is 

currently in operation in Andhra Pradesh, Gujarat, Haryana, Karnataka, Madhya Pradesh, 

Maharashtra, Orissa, Punjab, Rajasthan and Uttar Pradesh. The seed crops of paddy, 

wheat, maize, jowar, bajra, gram, red gram, ground nut, soyabean, sunflower and cotton 

are covered. 

c. Direct Cash Transfer Schemes 

Many economists argue that it is more efficient to introduce direct cash transfers to poor. 

Such schemes have been introduced in Mexico and Brazil. These schemes can be made 

conditional on the families satisfying certain criteria like children going to school or 

receiving basic immunization vaccinations. There are mixed views about the role of 

conditionalties in direct cash transfer schemes as they require follow-ups and monitoring, 

and as such additional administrative costs. One argument against cash transfer has 

been that they induce dependence. However, income supplements are very effective in 

the case of the extremely poor. These schemes can be implemented for the poorest and 

the most disadvantaged sections of the society. 

It is suggested here that for the extremely poor, direct cash transfer in the form 

of ‘social income’ may be administered to the first two deciles of the BPL population in 

the rural areas. It is important that the extremely poor have some minimum income to 

start with because of the need for meeting access cost and overcoming participation 

barriers to avail the benefit of other services provided by the government for health and 

education As noted in Table 6.4, the extent of leakage is nil up to the first two deciles of 

the BPL population. As a second check, the identified beneficiary may be endorsed by the 

village Panchayat. The amount of income may be determined by the number of male 

members including children multiplied by half the state-specific price adjusted poverty 

line (per person per month) and number of female members multiplied by the full 

amount of this poverty line (this is illustrative only). The money should be transferred on- 

146

line to post-office saving banks or rural banks or as a last resort through money orders 

direct to the household head. 

d. Schemes for Providing Income Generating Assets 

One income generating asset capable of producing income in the dwelling itself may be 

provided to any BPL family that asks for it. Such as asset can be operated by any 

member of the family in spare time and can provide valuable supplementary income for 

the family. Such an asset should require minimum maintenance. Recently in Rajasthan a 

scheme of providing electricity generating charkha (e-charkha) has been introduced 

successfully. The e-charkha is an improvised version of Ambar Charkha designed by 

Ekambarnath who hailed from Tamil Nadu. The e-charkha is used for making yarn as well 

as for lighting a bulb or producing moderate amount of electricity. The charkha has 

equipment to store electricity in its attachment to light up a room for 8 hours. Using the 

charkha Rs. 30- 45 can be earned by spinning the yarn. The e-charkha costs only Rs. 

8500 and the attachment for producing electricity cost Rs. 1500. A good part of these 

can be subsidised by the state government. 

6.6 Role of Local Governments in Poverty Reduction 

The essence of decentralisation is to transfer functions, finance and functionaries to the 

local bodies. This facilitates policy formulation and implementation according to local 

needs and priorities leading to more efficient use of resources and delivery of services. 

After the enactment of the 73 rd and the 74 th Amendment of the Constitution for 

empowerment of rural and urban local bodies, the responsibility for elementary education 

was transferred to the gram panchayats and municipal corporations. Tamil Nadu already 

had a decentralised system of education service delivery even before the constitutional 

amendment came into force. There is also community participation in school education 

through village education committees. Teachers were under the control of local bodies, 

who paid their salaries, utilising grants received from the government. However from 

1981, the teachers in panchayats and municipal schools were regularised as state 

government employees. 

Decentralisation can help improve the poverty alleviating content of 

governmental interventions if: 

i. Local governments have the option to select programmes or schemes most suited 

to their requirements from among the numerous centrally designed schemes. 

147

ii. 

The local level institutions (PRI and municipal) can help in better targeting of 

household or individual oriented benefits. Also, they are in better position to 

understand the local infrastructure deficiencies. 

iii. In the context of primary schools, interface with village panchayats can improve 

attendance of both teachers and students. 

iv. It is only in programmes or services where specialised and technical inputs are 

needed like watershed development programmes, should agencies or societies be 

involved, but they should have a clear interface with the PRI institutions. 

6.7 Reaching the Urban Poor 

a. Features of Urban Poverty 

Rural poverty is often considered the core of poverty in India, because of the large 

number of rural poor, high incidence of poverty in rural population, their limited access to 

information, security, health and education. However, urban poverty is now becoming a 

growing problem. Urban poverty generally is qualitatively different from rural poverty. 

While rural poverty is related more to inadequacy of income, urban poverty is related, 

apart from income shortfalls, to unhygienic conditions of living and deficiencies in basic 

services. Cities attract the rural poor who often land into or create urban slums. 

Dandekar and Rath (1971) had earlier written: “… The character of urban poverty is the 

consequence of the continuous migration of the rural poor into the urban areas in search 

of a livelihood, their failure to find adequate means to support themselves there and the 

resulting growth of pavement and slum life in the cities”. 

In India, Bhanumurthy and Mitra (2003) decomposed changes in poverty into a 

growth effect, an inequality effect, and a migration effect for two periods: 1983 to 1993- 

94 and 1993-94 to1999-00. The decomposition analysis showed that rural-to-urban 

migration contributed to poverty reduction in rural areas by 2.6 percent between 1983 

and 1993-94. Poverty in the urban sector increased during the same period, but by a 

smaller rate than the reduction of poverty in rural areas. Therefore, the net poverty 

incidence for the country as a whole decreased over the period studied. Similar findings 

were reported for the 1993-94 to 1999-00 period. Rural poverty declined by 1.64 percent 

as a result of rural to urban migration, while urban poverty increased by 1.43 percent. 

While rural poverty is marked by connections to agriculture and land, urban poverty is 

more heterogeneous in income generation and location patterns. The urban poor exhibit 

highly diverse pattern of activities and problems. Devising programmes and policies to 

148

each the urban poor who live in slums and non-slum areas is the new challenge for 

poverty reduction strategy. 

b. Slum Population in Tamil Nadu 

Tables 6.11 and 6.12 provide information on the share of slum population to total urban 

population for 1981, 1991, and 2001. The all India figures indicate that the share of slum 

population in total urban population has increased from 17.5 percent in 1981 to 21.3 

percent in 1991. 

Table 6.11: Changing Share of Slum Population in Urban Population (1981 and 1991) 

(Population in Lakh) 

States 1981 1991 Differenc 

Urban 

Populatio 

n 

Slum 

Populatio 

n 

% of 

Slum 

to 

Urba 

n 

Urban 

Populatio 

n 

Slum 

Populatio 

n 

% of 

Slum 

to 

Urba 

n 

e 

in % 

(1991- 

1981 % 

Points 

Andhra 

Pradesh 124.9 28.6 22.9 178.9 43.1 24.1 1.2 

Bihar 87.2 32.7 37.5 113.5 26.9 23.7 -13.8 

Gujarat 106.0 15.3 14.4 142.5 25.8 18.1 3.7 

Haryana 28.3 2.7 9.7 40.5 6.8 16.9 7.2 

Karnataka 107.3 5.7 5.4 139.1 12.9 9.3 3.9 

Kerala 47.7 4.1 8.6 76.8 12.2 15.9 7.3 

Madhya 

Pradesh 105.6 10.7 10.2 153.4 21.0 13.7 3.5 

Maharashtr 

a 219.9 43.1 19.6 305.4 78.7 25.8 6.2 

Orissa 31.1 2.8 9.1 42.4 8.4 19.9 10.8 

Punjab 46.5 11.7 25.1 59.9 14.1 23.6 -1.5 

Rajasthan 72.1 10.3 14.2 100.7 24.0 23.8 9.6 

Tamil 

Nadu 159.5 26.8 16.8 190.8 35.7 18.7 1.9 

Uttar 

Pradesh 199.0 25.8 13.0 276.1 58.4 21.2 8.2 

West 

Bengal 144.5 30.3 21.0 187.1 51.9 27.8 6.8 

Delhi 57.7 18.0 31.2 84.7 22.5 26.5 -4.7 

All India 1597.3 279.1 17.5 2176.1 462.6 21.3 3.8 

Source: Report of the Working Group on Urban Housing and Urban Poverty with Focus on Slums for the Tenth 

Plan (2002) and Population Census 2001. 

149

In Tamil Nadu, in 1991 nearly 18.7 percent of urban population was in slums, 

which was only slightly below the all-India average. In 2001, this percentage has gone 

down to about 9.3 for Tamil Nadu while for all-India also the percentage fell to 14.1. 

However, there has been a considerable rise in absolute terms in the number of people 

living in slums. The number of people living in slums in India has more than doubled in 

the past two decades and now exceeds the entire population of Britain. India’s slumdwelling 

population had risen from 27.9 million in 1981 to 40.3 million in 2001. In Tamil 

Nadu, in 2001, nearly 2.53 people were living in slums. 

Table 6.12: Changing Share of Slum Population in Urban Population 

(1991 and 2001) 

(Population in Lakh) 

States 2001 Difference 

Urban 

Population 

Slum 

Population 

% of Slum to 

Urban 

Population 

in % 

(2001-1991) 

% Points 


Bihar 146.66 8.17 5.57 -18.1 

Gujarat 188.99 13.46 7.12 -11.0 

Haryana 61.14 14.21 23.24 6.4 

Karnataka 179.20 12.67 7.07 -2.2 

Kerala 82.67 4.53 5.48 -10.4 

Madhya Pradesh 202.78 31.76 15.66 2.0 

Maharashtra 410.20 106.44 25.95 0.2 

Orissa 54.96 6.35 11.55 -8.4 

Punjab 82.46 11.51 13.96 -9.6 

Rajasthan 132.05 12.06 9.13 -14.7 

Tamil Nadu 272.42 25.30 9.29 -9.4 

Uttar Pradesh 366.83 43.51 11.86 -9.3 

West Bengal 224.87 38.22 17.00 -10.8 

Delhi 128.20 20.25 15.80 -10.7 

All India 2853.5 402.97 14.12 -7.1 

Source: As in Table 6.9. 

Note: Bihar, Uttar Pradesh, and Madhya Pradesh are the combined states where total are obtained by adding 

up the respective new and old states. 

However, the urban poor live in slums as well as in non-slum areas. In slum 

areas they are concentrated and in the non-slum areas, they are diffused. In the 

Eleventh Plan document of the Government of Tamil Nadu (2007), it is acknowledged 

that all the urban poor do not live in slums. The urban poor population in India is 

estimated to be nearly 9 crore currently, while the slum population is 4 crore. The 

150

Eleventh Plan (2007) observes: “Our knowledge about the urban poor outside of slums is 

superficial. If there are as many urban poor living outside of slums as there are living in 

slums, the focus of poverty alleviation should differ considerably from merely aiming 

mainly to upgrade slums and to provide job training for slum dwellers. It is now 

recognized that provision of urban basic services to the poor will have to form the 

backbone of urban poverty alleviation programmes”. 

Table 6.13 gives details about the Tamil Nadu’s urban agglomerations. 

Table 6.13: Tamil Nadu – Distribution of Towns by Size Class, 2001 

(Category-wise) 

Size class Types of Cities / Towns (Population Size) No. of Urban 

Agglomerations/ 

Towns 

Mega Cities (50,00,000 and above) 1 

Metro Cities (10,00,000 – 49,99,999) 2 

Class I Large Cities (5,00,000 – 9,99,999) 3 

Medium Cities (3,00,000 – 4,99,999) 3 

Small Cities (1,00,000 – 2,99,999) 20 

Class II Large Towns (50,000 – 99,999) 45 

Class III Medium Towns (20,000 – 49,999) 118 

Class IV Small Towns (10,000 – 19,999) 282 

Class V Towns (5,000 – 9,999) 182 

Class VI Towns (below 5,000) 12 

Total 668 

Source: Study report of Association of Urban Management and Development Authorities (AMDA). 

c. Some Important Urban Poverty Reduction Programmes 

Government programmes aimed at urban poverty alleviation have a long history. Some of 

the main landmarks are noted below: 

1958: Start of Urban Community Development (UCD) pilot project with an area-oriented 

approach. 

1972: Start of Environmental Improvement of Urban Slums (EIVS). 

1985: Expansion of Urban Basic Services (UBS) programme, already implemented 

during 1981-84 in 42 towns with the help of UNICEF to 168 towns. 

1989: Four pronged strategy comprising 

i. employment creation for low income communities through promotion of micro 

enterprises and public works, 

ii. housing and shelter upgradation, 

151

iii. 

iv. 

social development planning with special focus on development of children and 

women, and 

environmental upgradation of slums. 

With these objectives, two schemes were launched. 

1989: i. Nehru Rozgar Yojana (NRY) 

ii. Urban Basic Services for Poor (UBSP) 

1995: Start of Prime Minister’s Integrated Urban Poverty Eradication Programme (PMI 

UPEP) made applicable to 345 Class II towns and 79 specifically identified district 

headquarters and hill areas. 

1997: Swarnajayanti Shahri Rozgar Yojana (SJSRY): In SJSRY, the earlier schemes of 

UBSP, NRY and PMI UPEP were merged. SJSRY has a urban self-employment 

programme (USEP) through promoting self-employment ventures, and the urban 

wage employment (UWEP) component. It also emphasises creating community 

structures, and applicable to all urban town in India. Much of the non-slum urban 

poor, live on streets, in and around railway and bus-stations, railway tracks, 

religious places. They are scattered all over the place, making urban governance 

difficult. Poor living conditions in slum and squatter conditions also leads to 

exposure to health hazards due to exposure to pollution and domestic and 

industrial waste. 

Some recent schemes include Jawaharlal Nehru Urban Renewal Mission (JNURM). 

In Tamil Nadu, three cities, i.e. Chennai, Madurai and Coimbatore have been selected for 

providing infrastructure development and basic services under this scheme. Preparation 

of City Development Plan is a pre-requisite under JNNURM assistance. The preparation 

of city development plans for the above mentioned cities had been taken up at the end of 

Tenth five year plan. 

One key issue for urban areas is provision of safe drinking water. Under 

Governmetn of Tamil Nadu initiatives, a Water and Sanitation Pooled Fund (WSPF), which 

is a Government Trust has been created to cater to the civic needs like water and 

sanitation for small and medium towns which are pooled together and debt is raised 

through market-oriented driven approach. The Government of Tamil Nadu has 

designated the Water and Sanitation Pooled Fund (WSPF) as the State Pooled Finance 

Entity (SPFE) under PFDF Scheme and authorized it to operate according to the 

guidelines issued by the Central Government. This fund aims to: 

152

i. provide financial assistance for setting up infrastructure projects, 

ii. mobilize resources from the capital market under pooled finance structure, 

iii. facilitate the participation of private sector in water and waste water sectors through 

direct investment and through joint delivery mechanism of Public Private Partnership, 

iv. enable Urban Local Bodies to access debt finance from markets, and 

v. act as nodal agency on behalf of Central and/or State Government for water, 

sanitation and/or any other infrastructure projects. 

During 2006, the Ministry of Urban Development, Government of India had 

introduced a Pooled Finance Development Fund (PFDF) Scheme. The main objectives of 

State Level Pooled Finance Mechanism are as follows: 

1. Development of bankable urban infrastructure projects. 

2. Reduce the cost of borrowing to local bodies with appropriate credit enhancement 

measures and through restructuring of existing costly debts. 

3. Facilitate development of Municipal Bond market. Bankable projects within the 

context of PFDF are defined as "those projects structured with appropriate credit 

enhancements in such a way that they demonstrate the capacity for servicing the 

market debt to the satisfaction of the rating agencies and potential investors". 

In the context of slums, some of the programmes introduced by the Government of 

Tamil Nadu are: 

a. repairs and renovation works for the slum tenements in Chennai and other towns, 

b. employment training programme for the urban slum youths in Tamil Nadu, 

c. improvement of slum tenements constructed by Tamil Nadu Housing Board after 

1971 at Madurai, and 

d. repairs and Renovation works for the slum tenements constructed by Tamil Nadu 

Housing Board. 

While urban poverty reduction languished for many years, in recent times a new 

thrust and priority has been given to this growing problem. Important among the new 

initiatives are the Jawaharlal Nehru Urban Renewal Mission, a modified Swarna Jayanti 

Shahari Rojgar Yojana, and the Rajiv Awas Yojana (RAS). 

Rajiv Awas Yojana envisages tackling the issues of inclusive growth and slumfree-cities, 

including basic amenities and affordable housing to the existing slum-dwellers 

153

as well as new additions to the number of poor due to urban growth. It emphasizes that 

States/UTs develop a Slum–free State/UT/Cities vision and develop a legal framework for 

regularizing space and accord property rights to the slum-dwellers as well as create 

space for the poor and new entrants to cities as they grow. It proposes a four-pronged 

approach: 

(i) ‘in situ’ development programmes with basic amenities and an enabling strategy for 

affordable housing in the case of ‘tenable’ slums, with reconfiguration to the extent 

possible based on town planning norms of the State/UT concerned; 

(ii) 

(iii) 

(iv) 

development in ‘relocation’ sites with affordable housing and access to all basic 

amenities, including easy access of public transportation to commute to jobs for 

rehabilitating the ‘untenable’ slums; efforts will first be made to re-examine the 

issue of so-called ‘untenability’ and whether the untenable slums could be settled in 

tenable slums with densification based on city-wise slum upgrading approach; 

housing and civic development programmes in peripheries of existing cities and 

towns to accommodate the urban poor including migrants, with a focus on publicprivate 

partnerships and requiring/incentivising developers to adopt inclusive 

zoning and reserve land/houses for the poor; and 

integrated-and-inclusive new townships around emerging hubs of industry, trade 

and commerce, including Special Economic Zones (SEZs) with adequate space for 

housing the poor and informal sector workers as part of the location policy for 

those entities. 

To develop a suitable city level strategy RAY will take up an ‘equitable cities 

campaign’ in select cities /municipalities. These cities will be enable to draw up 

development and action plans within the state specific plan/policy, and to operationalise 

them to upgrade or rehabilitate existing slums and make new land and housing available 

for the urban poor within the formal planning system at least at the rate of their growth 

in population. The RAY emphasizes taking a whole city (preferably city agglomeration) 

approach, mapping all existing slums and deficiencies therein, and undertaking a 

complete household biometric survey with identification numbers. 

The objectives of the revised (with modified guidelines) Swarna Jayanti Shahari 

Rojgar Yojana (SJSRY) are: 

• Addressing urban poverty alleviation through gainful employment to the urban 

154

unemployed or underemployed poor by encouraging them to set up self-employment 

ventures (individual or group), with support for their sustainability; 

• Supporting skill development and training programmes to enable the urban poor 

have access to employment opportunities opened up by the market or undertake to 

self-employment; and 

• Empowering the community to tackle the issues of urban poverty through suitable 

self-managed community structures like Neighbourhood Groups (NHGs), 

Neighbourhood Committees (NHC), and Community Development Society (CDS). 

The delivery of inputs under the Scheme shall be through the medium of urban 

local bodies and community structures. Thus, Swarna Jayanti Shahari RojgarYojana seeks 

to strengthen these local bodies and community organizations to enable them address 

the issues of employment and income generation facing the urban poor. 

It may however be remembered that slum clearance schemes in India are quite 

old. The success so far has been limited because of legal, administrative, and financial 

hurdles. Also, the approach so far has not been holistic. Slums require to be viewed as 

part of the larger problem of housing and mass deprivation that confronts a city. There 

has to be realistic recognition of the constraints so that measures are devised to 

overcome these. Accessing urban land for housing the poor in a high-value real estate 

market will continue to be a serious challenge. There will be an urgent need to create 

land banks through appropriate land-use zoning. Substantial financial allocations from the 

central, state, and local governments will also be required. 

Given this context, the new initiative in terms of these two programmes are 

welcome and would provide a significant breakthrough if these are followed up by a citybased 

strategy for reducing urban poverty supplemented by effective support by the 

state governments. 

Under the RAS, urban local bodies will be required to 

a) conduct slum and BPL household surveys, priorities slums identify beneficiaries, 

explain schemes and issue biometric ID cards; 

b) implement the RAS in convergence with Jawaharlal Nehru National Urban Renewal 

Mission, including the scheme of Affordable Housing along with other programmes, 

dovetailing Swarna Jayanti Shahari RojgarYojana to address the concerns of 

employment and skill development of the urban poor in addition to shelter; and 

c) induce public private partnership in construction, especially new construction of 

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social housing by identifying land or deciding on models for public-private – 

partnership with land of the private parties. 

Wherever feasible, additional land for urban development will need to be 

released by the construction of outer ring roads. The construction of the ring roads and 

extension of inner city road networks themselves will create jobs for skilled as well as 

unskilled labour, release land for other economic activities between the ring road and the 

inner city or otherwise extended urban areas while preventing formation of additional 

slums through the strategy of low-cost housing. However, separate financing will be 

required for the development of physical and social infrastructure. 

The action plan for poverty reduction strategy is given in Table 6.14. 

Table 6.14: Implementing Poverty Reduction Strategy: Key Interventions 

Tackling Slums 

Implement law already enacted for 

transfer of property rights to identified 

slum households 

Issues bio-metric cards to slum 

household heads by the end of financial 

year 2010-11. 

Identify land banks or cluster of areas for 

allocation for low-cost housing meant for 

relocation of slums 

Develop roads, schools and health 

centres in the vicinity of these areas 

Health and Education 

Improve coordination and develop a common 

policy and regulatory framework among 

various public and private sector providers 

(including NGOs) of education in slum areas 

Set up an education management 

information system that will improve 

educational data collection, information 

systems and monitoring and evaluation 

citywide 

Management by the community with the 

involvement of NGOs 

Local industries and other corporations 

should be involved in financing community 

colleges (through scholarships) as part of 

corporate social responsibility 

Strengthen the effectiveness of the National 

Literacy Mission so that literacy rate is 100 

percent for both men and women 

Use the National Open School to improve the 

level of educational attainment 

156

Services 

Prepare detailed water supply and 

sanitation projects for all areas where 

new housing has been provided when 

slums are developed into in situ or 

relocated 

Introduce efficient collection and 

transportation of municipal waste in the 

slum areas to the waste processing and 

disposal site 

Train slum dwellers to recycle, reduce 

and reuse process of industrial and other 

solid wastes 

Employment and Livelihood 

New SJRSY 

Involve locally active NGOs to develop 

projects under the new guidelines, 

particularly utilizing the cluster approach. 

Microfinance 

Public-private partnership in both delivery of 

credit and setting up micro-enterprises. 

Provide non-financial services such as 

technology, marketing and risk management. 

6.8 ICT-based Initiatives for Last Mile Reach 

Modern information processing and communication technologies offer significant potential 

for last mile reach strategies for both targeting and delivery. These can be very effective 

in tracing outcomes, continuous tracking of beneficiaries, delivery of funds, checking for 

efficiency of pattern of allocation of funds, and evaluation of performance of funds, and 

assessment of the impact of schemes. These can also be very cost-effective in delivery of 

cash benefit payments. Some useful transfer mechanisms are money order delivery of 

benefits via the postal system (e.g. social pensions in many states) and on-line 

transmission for deposits into bank or postal savings accounts. There are also nonregular 

forms of payments, including transfer of NREG wages through field assistants or 

in some cases contractors. For cash transfers, some of technological options include low 

cost ATMs equipped with finger printer or other identification mechanisms, point-ofservice 

(POS) devices installed in local shops and gas stations, and delivery through 

mobiles. Mobile phone banking is an emerging phenomenon particularly for managing 

micro credit that utilizes comprehensive penetration of the new communication networks. 

Information networks electronically maintained also have the potential to serve as new 

employment exchanges. 

In Tamil Nadu for implementation of e-Governance in the administration of 

Labour Department, development of software and networking are being considered to 

suit the functioning of the department upto the grass root level and for enabling the 

public to interact with the department online. It is proposed to provide computers and 

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internet facilities to the various offices through ELCOT. An outlay of Rs.1.50 crore is 

proposed for implementation of this scheme during the Eleventh Plan period 

6.9 Summary 



that they reach minimum acceptable levels of the MDGs, there is a need specialised 

programmes, identifying the targeted sections of population, allocate suitable funds, and 

administer the programmes. 

While a large array of central and centrally sponsored schemes serves to provide 

the last mile reach, there are issues about inefficient fund allocation, overlapping and 

multiplicity of schemes, by-passing of states, and implementation inefficiencies. The 

central initiatives also need to be complemented by state schemes that cater to their 

specific needs. In the case of Tamil Nadu, three thrust areas are important: (a) 

secondary and higher education, (b) tackling urban poverty, and (c) provision of safe 

drinking water. 

In this Chapter, it is suggested that geographic targeting, leading to identification 

of districts, blocks/urban agglomerations, villages/zones/slums, and finally 

households/individuals would be the most effective strategy of targeting. Allocation of 

funds to take into account the share of targeted beneficiary population in the concerned 

unit and the extent of relative deficiency. Allocations have to be with reference to specific 

goals relating to income deficiency, health, education and gender, rather than on the 

basis of aggregate and weighted indices. For improving implementation and allocation 

efficiency, extensive use of information and communication technologies are to be made. 

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Chapter 7 

SUMMARY AND FORMULATION OF POVERTY REDUCTION STRATEGIES 

This chapter has three parts. The first part provides a summary of the findings of the 

earlier chapters. In the light of these findings, the second part highlights the main 

challenges and considerations in designing the overall MDGs-based poverty reduction 

strategy for Tamil Nadu. The third part, details the poverty reduction strategy (PRS) for 

Tamil Nadu both for the state and the district level. The PRS is in three parts: state level 

PRS for rural areas (SPRS-R), district level PRS (DPRS-R) for rural areas, and poverty 

reduction strategy for urban areas (UPRS). 

7.1 Summary of Findings 

a. Trends in Poverty Reduction 

Trends in poverty reduction in Tamil Nadu over time and in comparison to other states 

are summarised as follows: 

1. Reduction in rural poverty in Tamil Nadu accelerated after 1983. During the 

period from 1983 to 2004-05, rural poverty head count ratio in Tamil Nadu fell by 

nearly 30 percentage points whereas the corresponding reduction in the all-India 

rural head count ratio was only 17 percentage points. 

2. Reduction in urban poverty in Tamil Nadu picked up sharply after 1993-94 but 

the fall in the head count ratio during 1993-94 to 2004-05 was much less in 

Tamil Nadu compared to the corresponding reduction in the all-India poverty 

urban head count ratio. 

3. Tamil Nadu has done comparatively better than most other states in reducing the 

combined poverty. The overall head count ratio at 22.5 in 2004-05 is nearly 5 

percentage points below the all-India figure at 27.5. At the same time, in 2004- 

05 several states in India including two southern states viz., Andhra Pradesh and 

Kerala had a considerably lower overall poverty head count ratio. 

4. The absolute number of urban poor in Tamil Nadu is more in 2004-05 as 

compared to 1973-74. There is a discernable trend toward urbanisation of 

poverty, measured by the percentage urban poor to total poor, which has 

increased over time. In 1973-74 nearly 30 percent of total poor in Tami Nadu 

were urban poor. In 2004-05, nearly 47.5 percent of total poor are urban poor in 

Tamil Nadu. 

5. Despite the progress achieved in reducing income poverty, hunger 

poverty/calorie deficiency remains a major problem in Tamil Nadu. 

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In relation to other millennium development goals (MDGs), some notable features are: 

a. The infant mortality rate was 15 in Tamil Nadu compared to 77 for All-India in 


b. In the context of enrolment, the retention rate in classees 1-8 as percentage of 

class 1 intake is 63.2 for Tamil Nadu, compared to 36.3 for all-India. 

c. In terms of gender disparities also, Tamil Nadu’s performance is comparatively 

better. The gender ratio was 98.6 in 2001 and the female literacy rate was 63.4. 

d. The incidence of HIV/Aids is disturbing with total number of reported cases more 



e. With growing urbanization, a major concern would be providing safe drinking 

water in urban areas with high density of population so that water-borne and 

related diseases could be kept at a minimum. 

In Tamil Nadu, water scarcity and land degradation are two major constraints 

that affect agriculture in the state, which impact the poor more than others. The recently 

published State’s Eleventh Plan has laid emphasis on coping with the agricultural crisis in 

the context of its impact on employment and poverty and has taken note of the interdistrict 

disparities in the development indicators. An effective poverty reduction strategy 

would need to be dovetailed to the on-going macro and structural changes, which will 

provide economies of scale in reaching the MDGs. For the remaining, specially designed 

polices will provide comprehensive coverage of the population facilitating reaching the 

MDGs in the stipulated time, enabling Tamil Nadu to become one of the front-runners 

among Indian States in attaining the MDGs. 

b. Economic Growth and Poverty Reduction 

Growth is one of the strongest antidotes to poverty. The pattern of ownership of assets 

and redistribution policies can strengthen the poverty reducing impact of growth by 

correcting market failures specially the imperfections of the credit and insurance markets. 

The sectoral composition of growth is also critical. In Tamil Nadu, as in India as a 

whole, the structure of the economy is shifting away from agriculture. For people 

remaining in agriculture, the real growth rate is likely to remain relatively low compared 

to the other sectors. Agricultural prices also tend to be volatile. These trends will lead to 

further migration of people away from agriculture to non-agricultural activities, and away 

from rural to urban areas. Growth in employment in the primary sector in Tamil Nadu has 

been negative in recent years whereas that in secondary and tertiary sector has been 

160

positive and relatively high. The basic challenge in the context of the changing structure 

of the economy and employment is to create the capacity to absorb the population 

migrating out of agriculture into industry and services with proper training and skill 

development. At the same time, productivity in agriculture should not be allowed to fall. 

This will require considerable additional investment in agriculture where government will 

have to play a key role as the returns will not be adequate to attract large inflows of 

private capital into agriculture. Higher growth, particularly in the non-agricultural 

sectors, has been shown to have a significant direct impact on reducing poverty in Tamil 

Nadu. 

c. Fiscal Reforms for Poverty Reduction 

Fiscal reforms and restructuring can strengthen growth and MDGs-based poverty 

reduction can be achieved by emphasizing human development. These changes are 

interdependent as expenditure on education and health accommodates absorption of 

labour in the non-agricultural sectors. This strengthens the growth momentum, 

generating additional revenues for the government for undertaking the required 

expenditures on health and education while continuing to meet the Fiscal Reforms and 

Budget Management (FRBM) targets. Further, fiscal space is created for undertaking 

additional investment in infrastructure. 

Tamil Nadu has been able to achieve its medium term fiscal responsibility 

targets. By 2008-09, it has already achieved a less than 3 percent fiscal deficit level 

relative to GSDP and a surplus on its revenue account. The ratio of outstanding liabilities 

relative to GSDP is about 22-23 percent and its interest payment liabilities also compare 

favourably with many other states. We have drawn up a fiscal restructuring plan for the 

period up to 2014-15 highlighting the scope for creating additional fiscal space for 

augmenting capital expenditure as well as expenditure on health and education relative 

to GSDP within the framework of the FRBMA. There is scope for increasing expenditure 

on water supply and sanitation, and on irrigation from the increased fiscal capacity. The 

following are the main features of the proposed fiscal restructuring. 

1. The FRBM targets of maintaining surplus on revenue account and keeping fiscal 

deficit at 3 percent of GSDP has to be adhered to throughout the period up to 2014- 

15. However, it is not necessary to over achieve the fiscal deficit target excessively 

by bringing it down much below 3 percent of GSDP. 

2. Keeping fiscal deficit at 3 percent of GSDP with some revenue account surplus, 

capital expenditure can be increased reasonably above 3 percent of GSDP. It is 

161

shown in the fiscal restructuring scenario that the capital expenditure to GSDP ratio 

can be increased to a level close to 4.6 percent of GSDP by 2014-15. This will not 

cause any increase in the debt-GSDP ratio, which remains close to 21 percent. 

3. On the revenue expenditure side, even though there may be some pressure on 

pensions and salaries, the interest payment relative to GSDP will steadily go down as 

growth of liabilities is kept in check. 

4. In combination with buoyant revenues, with buoyancy marginally above 1, 

expenditure on education and health can be increased from 2.56 and 0.66 percent of 

GSDP in 2007-08 RE, respectively, to nearly 5 percent of GSDP in the case of 

education and a little less than 1.3 percent in the case of health. This will however 

necessitate some reduction in other social and economic services but some 

restructuring within this group can accommodate increase in expenditure on water 

supply and sanitation. 

5. Other components of fiscal structuring would include reforms in subsidies, continuous 

monitoring of non-tax revenues, linked to increases in the cost of providing services, 

and preparation for the implementation of the Goods and Services Tax (GST). 

d. Coping with Inter-district and Intra-district Imbalances 


respect of the incidence of poverty, nature and level of economic activities, education 

indicators, health indicators and gender development indicators. Demographic differences 

like the share of young population in total population also provide significant inputs for 

devising a suitable strategy for coping with spatial imbalances in the context of MDGsbased 

poverty reduction. The following are some of the major highlights of inter-district 

deficiencies in Tamil Nadu. 

(i) Income and Poverty 

1. In terms of real per capita Gross District Domestic Product (GDDP), indicative of 

income differences, the most deficient five districts are: Villupuram, Thiruvannamalai, 

Dharmapuri, Krishnagiri, and Thiruvarur. Relative to the average, the differences 

across districts in per capita GDDP are quite large. 

2. In terms of share of below poverty line (BPL) population to total rural population, the 

districts with the highest incidence are: Ramanathapuram (59.5 percent), Madurai 

(42.8 percent), Perambalur (39.5 percent), Karur (37 percent), and Kanchipuram and 

Sivagangai (35 percent). 

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3. In terms of composition of BPL population - districts with the largest share of landless 

labour - the five most disadvantaged districts are Theni, the Nilgiris, Thirunelveli, 

Kanniyakumari, and Madurai. 

4. For electricity connectivity, the most deficient districts are: Thiruvarur, Nagapattinam, 

Pudukkottai, Ariyalur, and Ramanathapuram. 

(ii) Education 

1. In terms of the gross enrolment ratio, the five most deficient districts are: 


average, the per capita differences in gross enrolment ratio (GER) are limited. 

2. In terms of literacy rate, the five most deficient districts are: Dharmapuri, Krishnagiri, 

Villupuram, Perambalur, and Erode. Inter-district differences in literacy relative to the 

average are nearly twice as large as in the case of GER. 

(iii) Health 

1. For life expectancy at birth (LEB), the five most deficient districts are: Theni, 

Dindigul, Virudhunagar, Ramanathapuram, and Namakkal. In this case also, the 

inter-district differences are limited. 

2. For population of children in the age group 0-6 years, the neediest districts are: 

Dharmapuri, Ariyalur, Pudukkottai, Ramanathapuram and Villupuram. 

3. For provision of safe drinking water, the neediest districts are: Ramanathapuram, 

Kanniyakumari, Thiruvallur, the Nilgiris and Sivagangai. 

(iv) Gender 

1. In terms of the gender development index (GDI), the five most deficient districts, 

taking into account all the determinants of GDI are: Dharmapuri, Villupuram, 

Krishnagiri, Thiruvannamalai, and Perambalur. 

2. For gender related disabilities, some of the notable districts are Dharmapuri, Salem, 

Theni, Perambalur and Virudhunagar. 

In all these cases, the relative position of all the districts in Tamil Nadu in terms 

of an index deficiency has been provided in this study. In terms of different indicators of 

achievements and needs, the relative order of districts often varies over a large range. 

Also, it is not the same district that is relatively most deficient in all respects although 

there are some districts that appear in the list of most disadvantaged in several respects 

like Dharmapuri, Ramanathapuram, Thiruvannamalai, Villupuram, and Perambalur. 

163

e. Water, Land and Agriculture 

Water, land and agriculture have strong linkages with poverty reduction. Most poor 

particularly in the rural areas, rely heavily on natural resources-land, and water and 

agriculture for their livelihood. Therefore, meeting MDGs will depend in large part as to 

how the State manages its scare water resources and how it develops effective water 

governance and improved water supply services. Policies relating to land redistribution 

and transfers will also play a crucial role. The key issues and challenges relating to water, 

land and agriculture may be highlighted as follows: 

1. Tamil Nadu is a water scare state with per capita water availability of 900 cubic 

meter (cm) as against the all India average of 2200 cm. The total water resource of 

the state is 42.23 billion cm (surface water 24.1 bcm and groundwater 23.1 bcm) 

and the total water demand already exceeds the availability and the deficiency is 

307.8 thousand million cubic feet. Agriculture is the largest user (above 90 percent) 

of water. 

2. Most of the water canals are old and have poor efficiency due to seepage, silting in 

the canals, and poor maintenance. Roughly 2 percent of revenue expenditure of the 

State is spent on irrigation and only 10 percent of it is spent on maintenance works. 

The maintenance expenditure is below the norm recommend by the Ministry of Water 

Resources leading to rapid deterioration of surface irrigation. 

3. The share of tank irrigation has declined due to siltation and encroachments in tank 

beds, damaged sluices, weirs and bunds. Further, the rate of extraction of 

groundwater exceeds recharge rate in many parts of the state. 

4. There are severe water quality problems in several basins due to industrial pollution 

and agricultural waste (fertilizer and pesticides). In recent years, the State has 

passed the Ground Water Regulation and Management Act and also enacted an 

important legislation to require rainwater harvesting system in all buildings to 

recharge the groundwater and arresting sea water intrusion. 

5. Nearly 66 percent of rural habitants are fully covered by rural water supply. Of 718 

urban towns, only in 19 municipal towns the water supply is poor (less than 50 litre 

per capita per day) and in 10 towns it is poor (less than 40 litre per capita per day). 

It is estimated that a capital investment of Rs. 1932 crore is required to provide 

access to safe drinking water to all households in the state. 

6. Current land distribution and use in Tamil Nadu reflects centuries old policies of 

settlement and cultivation. Due to land ceiling policy and land to tiller, very large 

farms disappeared and the average farm size is 0.89 hhectares. About 97 percent 

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holdings are smaller than 4 hectares each. The small holding size sets the limit for 

investment in farm assets/modern inputs. 

7. Of the total land area of 13 million hectares, forest accounts for 16 percent (as 

against the environmentally desirable norm of 33 percent). Area under current fallow 

and other fallow is increasing. About 13 percent of area is designated as wasteland. 

Reclamation of cultivable waste/fallow land will be essential to increase the area 

under cultivation. 

8. Paddy is still the dominant crop accounting for 32 percent of gross cropped area. 

Sugarcane and groundnut are important commercial crops. Horticulture is raised in 

15 percent of gross area. Although the State compares well in term of productivity of 

many crops with other major states, the productivity of many of these has declined 

over time. Evidences indicate the presence of yield gap in many major crops. 

9. Agriculture is still a dominant private sector providing livelihood for more than 50 

percent of people. About 3 million are landless agriculture labourers. The labour 

productivity in this sector is about 5 times as low as that in tertiary sector. The 

Government implements a scheme of distributing two acres of Wasteland to Landless 

Poor Agricultural Labourers. 

Managing and developing water resources, in the context of its heavy demand 

form agriculture as well as industry and providing drinking water of acceptable quality 

and adequate quantity are of critical importance for an MDGs-based strategy of poverty 

reduction in Tamil Nadu. 

f. Last Mile Reach Strategies 



that they reach minimum acceptable levels of the MDGs, we need specialised 

programmes, identifying the targeted sections of population, allocate suitable funds, and 

administer the programmes. 

While a large array of central and centrally sponsored schemes serve to provide 

the last mile reach, there are issues about inefficient fund allocation, overlapping and 

multiplicity of schemes, by-passing of states, and implementation inefficiencies. The 

central initiatives also need to be complemented by state schemes that cater to their 

specific needs. In the case of Tamil Nadu, three thrust areas are important: secondary 

and higher education, tackling urban poverty, and provision of safe drinking water. 

165

It is suggested that geographic targeting, leading to identification of districts, 

blocks/urban agglomerations, villages/zones/slums, and finally households/individuals 

would be the most effective strategy of targeting. Allocation of funds should take into 

account the share of targeted beneficiary population in the concerned unit and the extent 

of relative deficiency. Allocations should be with reference to specific goals relating to 

income deficiency, health, education and gender, rather than on the basis of aggregate 

and weighted indices. For improving implementation and allocation efficiency, extensive 

use of information and communication technologies should be made. 

7.2 Poverty Reduction: Main Challenges in Tamil Nadu 

In developing a suitable strategy of poverty reduction in the context of achieving the 

MDGs, some of the main challenges and considerations for Tamil Nadu may be 

summarised as below. First, Poverty reduction has to aim at a sustained increase in 

incomes. Otherwise, as elsewhere in India, even with a successful implementation of a 

number of poverty alleviation programmes, there will only be a bunching of people just 

above the official poverty line. These people will remain vulnerable to a variety of 

exogenous shocks. Further, poverty reduction has to be strategised in a multidimensional 

framework covering education, health, access to public services and safe 

drinking water. Therefore, fiscal reforms will have to play a key role. 

Secondly, in Tamil Nadu, poverty is becoming progressively urbanized. A clearcut 

strategy for reducing urban poverty needs to be in place. There are some significant 

differences in rural and urban poverty. The rural poverty reduction programmes cannot 

be fully replicated in the urban areas. Different strategies need to be developed for the 

poor living in the slum and non-slum areas. Apart from income poverty, education of the 

children, health and hygiene, and safe drinking water are more significant problems for 

the urban poor. 

Migration of the rural poor to urban areas is likely to continue unabated as the 

share of agriculture is expected to progressively fall while the share of the nonagricultural 

sectors, particularly the services sector, will progressively increase. New job 

opportunities in the services sectors can be availed of only if the population is suitably 

trained and educated. The overall demographic structure is also changing such that the 

share of working age population will be increasing in the medium term and the share of 

older people will increase in the longer run. These changes require massive investment in 

education first and health in the longer run. 

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There are considerable inter-district and intra-district differences in the poverty 

profile as well as education, health, and gender related deficiencies and the relative 

positions of districts are quite different in terms of different indicators. As such, 

considerable efficiency gains will occur by increasing the correlation of inter-district 

allocation of resources being spent by the Government under various programmes with 

indicators of inter-district deficiency for different services having a bearing on the MDGs. 

A proper district wise targeting and realignment of various programmes will considerably 

increase the impact of these programmes. The same strategy can be followed for intradistrict 

allocations. 

7.3 Tamil Nadu Poverty Reduction Strategy: A Suggested Framework 

With these considerations in mind, a MDGs-based poverty reduction strategy can be spelt 

out consisting of six steps abbreviated as MASTER. This is detailed below. 

a. Macro Drivers: Managing macro drivers, particularly growth, and improving its 

‘inclusiveness’ by increasing the connectivity of the poor to the growth processes. 

b. Augmenting Fiscal Space to increase primary expenditures relative to GSDP. 

c. Structuring government expenditure towards MDGs (increasing the share of 

expenditure on public goods like law and security and merit goods like health 

and education, and capital outlay for infrastructure and away from excessively 

subsidized private goods). 

d. Targeting of programmes towards specific areas and sections of poor; a fourtier 

targeting strategy with additional focus on urban areas will be effective in 

Tamil Nadu. 

e. Efficiency enhancement by exploring scope for design, allocation, and 

implementation efficiencies. 

f. Reforming Poverty Reduction Programmes: reforming state schemes and 

taking maximum advantage of central and centrally sponsored schemes and 

developing specialized programmes for the urban poor. 

These components are further discussed below in the context of state level rural 

poverty reduction strategy, district level poverty reduction strategy for rural areas, 

and state and district level urban poverty reduction strategy. 

7.4 State Level Poverty Reduction Strategy 

First we consider the state level poverty reduction strategy (SPRS) especially focusing on 

the rural areas (SPRS-R). It may be noted that rural and urban poverty are linked 

because of the dynamics of structural changes in the economy and pattern of migration. 

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a. Macro Drivers 

The key to sustained poverty reduction is growth, particularly if it is accompanied by a 

high ‘elasticity of connection’ of people to the growth processes. Effective participation of 

the poor in the growth processes requires that the changing structure of the economy as 

a result of growth has to be taken into account. In the case of Tamil Nadu, the dynamics 

of growth is such that the share of services sector will grow as a result of the differentials 

in agricultural and non-agricultural growth rates. The growing demand for skilled and 

educated people in the services sector should be accompanied with a substantial increase 

in expenditure on education and skill training. At the same time, adequate investment in 

agriculture will ensure higher productivity for farmers who will continue to be linked with 

agriculture. While a state government has limited control on inflation, which is 

determined more by national level forces and policies, the state government can at least 

protect the poor through insurance or similar policy interventions in periods of high 

inflation or economic slowdown. 

It is desirable for Tamil Nadu to aim at a growth rate that is at least 0.5 to 1.0 

percentage points higher than the National Gross Domestic Product (GDP) growth rate on 

a sustained basis. If the real GDP growth rate is likely to average at about 9 percent 

(leaving out the current slowdown phase), the Tamil Nadu GSDP should aim to grow at 

9.5 to 10.0 percent per annum in the medium term. Given Tamil Nadu’s relatively lower 

growth of population, this could translate into higher growth in per capita incomes of 

about 1.5 to 2.5 percentages to the average for India. This will require attracting 

considerable investment from the rest of India and abroad. These trends will lead to a 

reduction in rural poverty both by reduction of the head count ratio in rural areas, and 

migration of some poor to the urban areas. 

b. Augmented Fiscal Space 

The medium term management of government finances should be such as to create 

additional fiscal space for undertaking higher expenditures on all aspects of MDGs-based 

poverty reduction, viz., income poverty, health, education, and gender related issues. It 

is possible that additional fiscal space for undertaking higher primary expenditures 

relative to GSDP can be created, comparing the 2007-08 RE and 2014-15 projections. Of 

this, nearly one percentage point of GSDP can come from the revenue side and about 0.3 

percent of GSDP from lower interest payments. It is shown that primary (non-interest) 

expenditure, considering revenue and capital expenditure together, can grow from 16.5 

percent of GSDP in 2007-08 RE to about 18.9 percent in 2014-15. Table 7.1 summarises 

the potential of creating additional fiscal space and resultant restructuring of 

expenditures. 

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Table 7.1: Adjustment during 2007-08 and 2014-15 Projection 

(Percent to GSDP) 

Fiscal Indicators 

2007-08 2014-15 2014-15 minus 

2007-08 RE 

Own Tax Revenues 10.11 10.95 0.84 

Total Revenue Receipts 16.08 17.06 0.98 

Interest Payments 2.13 1.84 -0.29 

Pensions 2.32 1.76 -0.56 

Education 2.56 4.93 2.37 

Medical and Public health 0.66 1.27 0.61 

Other Social Services 2.63 2.00 -0.63 

Total Social Services 5.85 8.20 2.35 

Economic Services 2.72 2.47 -0.25 

Total Revenue Expenditure 15.77 16.33 0.56 

Revenue Surplus 0.32 0.73 0.41 

Fiscal Deficit 2.56 3.00 0.44 

Primary Deficit 0.44 1.16 0.73 

Capital Expenditure 2.88 4.38 1.50 

Total Expenditure 18.65 20.71 2.06 

Primary Expenditure 16.52 18.87 2.35 

Outstanding Liabilities 22.73 22.36 -0.38 

Source: As in Table 3.7. 

c. Structuring Government Expenditure towards MDGs 

It has been indicated in this study that it is feasible to substantially increase allocations to 

health and education as well as capital outlay in Tamil Nadu, in the period from 2008-09 

to 2014-15. In particular, based on a set of assumptions, expenditure on education can 

be increased from about 2.6 percent of GSDP in 2007-08 RE to close to 5 percent of 

GSDP by 2014-15. In the case of health (Medical and Public Health and Family Welfare), 

expenditure can be raised from 0.66 percent of GSDP in 2007-08 to 1.27 percent, 

implying a near doubling of the share relative to GSDP. Capital expenditure (net of 

repayments) can and should be raised from 2.9 percent of GSDP to 4.6 percent during 

the same period. In contrast, the expenditure on interest payments and to some extent 

pensions would be reduced. There would also be reduction relative to GSDP in some 

general and economic services. 

d. Targeting 

With the availability of additional fiscal space, the next step is to allocate it in a manner 

that MDGs based poverty reduction is effectively achieved. We suggest a four-tier 

169

targeting strategy: First, District Level (separately for urban and rural poverty reduction), 

second, from District to Blocks (Taluks) in the case of rural programmes and from District 

to urban agglomerations (cities/towns) for urban programmes. At the third level, 

targeting is form blocks to villages (rural areas) and from cities/town to slums and nonslum 

areas of zones/wards for urban areas. At the fourth level, in respect of selected 

schemes, households or individuals constitute the last unit of targeting. Geographic 

targeting, as already discussed, tends to be cost effective and efficient in achieving the 

desired results. It is also the most straightforward to administer. 

e. Enhancing Efficiency 

The next step is the strategy for fund allocation according to the targeting strategy and 

associated priorities. Efficiency can be thought of in terms of (a) design efficiency, (b) 

allocation efficiency, and (c) implementation efficiency. There is considerable scope for 

improving outcomes by using the same amount of funds by enhancing efficiency in all 

these three respects. However, in respect of the MDGs, where there are considerable 

spatial variations across districts and within districts, maximum and immediate gains are 

expected through improving allocation efficiency. In this study, it is argued that allocation 

efficiency can be easily obtained whereas implementation efficiency can be improved 

over a longer period of time. A three-tier targeting strategy is suggested for this purpose. 

There is also scope for improving the design of state level poverty reduction programmes 

or introducing new programmes. 

For a variety of centrally sponsored schemes, funds are allocated among states 

on the basis of poverty levels based on NSS data and other related considerations as 

reviewed in Chapter 6. While some funds are administered directly to the local bodies, 

societies, etc by the concerned central ministries, in other cases, funding is channeled 

through the state governments. In all cases, where central and centrally sponsored 

schemes are administered through the state governments, allocation of funds among 

districts should be aligned to the relevant index of relative deficiency. In addition, for all 

the state schemes, this strategy should be followed. For fund allocation, some 

adjustment may be needed in the index of deficiency (discussed in Chapter 4) because as 

long as the index varies between zero and some upper limit, the highest placed unit 

(district or block) would not receive any funding. For this purpose, the following 

methodology is suggested: 

Let a redefined index of relative deficiency for any MDG related indicator be 

given by: 

170

R i =(I a +I max -I i )/(I a +I max -I min ) 

Here ‘I’ refers to an indicator, and subscript ‘i’ refers to a particular district or block, I max 

and I min are the highest and lowest values for the concerned indicator, and ‘a’ average for 

all districts/blocks. 

Then the suggested scheme for allocation of funds is given by 

S i = N i . R i /ΣN i R i . 

Here, 

S i is the share of the ‘i’th district or block, 

N i is the size of the population of potential or targeted beneficiaries in the ‘i’ th 

district or blocks, and 

R i is the revised index of relative deficiency. 

This formulation ensures that the district or block which has the highest value in 

terms of the concerned indicator also gets a positive share (S max = (I a )/(I a +I max -I min ) and 

all other districts or blocks with a higher relative deficiency, get a higher share. It may be 

noted that I a is a choice variable and the number I a can be replaced by another positive 

number. Once this is done, all other shares are automatically determined. The larger the 

range of the concerned indicator, the lower will be the share of the district with the 

highest value of the relevant indicator. Efficiency gains will be obtained even if the fund 

allocations are not fully aligned to the index of relative efficiency but it is ensured that 

there is a high degree of correlation between relative deficiency and share of funds after 

the size differences in the population of potential beneficiaries are taken into account. 

Appendix Table 7.1 gives illustrative calculations for selected indicators of relative 

deficiency covering per capita district domestic product, literacy rate, gross enrollment 

ratio, and life expectancy the Tamil Nadu districts. 

In addition, there are potential efficiency gains through modifications in the 

design of schemes and improving technical efficiency of the institutions involved in the 

delivery of services like schools and health centres. Illustrations using data envelope 

analysis for the health centres discussed in Chapter 6 indicate that it is possible to 

identify those educational institutions and hospitals where there is clear scope of 

increasing efficiency in the delivery of services. As far as design of programmes is 

concerned, as discussed in Chapters 4 and 6, some of flagship programs and indicators 

developed by the central government like National Rural Employment Guarantee Scheme 

(NREGS) and BPL enumeration, there are considerable design and implementation 

171

deficiencies. State governments have however more control on their own schemes. 

f. Reforming Poverty Reduction Programmes 

Reforming programmes includes introduction of new programmes also. This is the last 

step in the suggested poverty reduction strategy. For Tamil Nadu, the best strategy is 

use to the maximum extent possible, funds flowing from the central and centrally 

sponsored schemes, and improve allocation and implementation efficiency to the extent it 

is under the control of the state government. This flexibility increases if funds under the 

centrally sponsored schemes are transferred to or administered through the state 

budgets in all cases. In addition, critical gaps should be filled up by state’s own schemes. 

Here, two additional programmes are suggested relating to an income-transfer scheme 

for the extremely poor in rural areas and an asset-provision scheme for all poor in rural 

areas. 

(i) Direct Cash Transfer Schemes 

Many economists argue that it is more efficient to introduce direct cash transfers to poor. 

Such schemes have been introduced in Mexico and Brazil. These schemes can be made 

conditional on the families satisfying certain criteria like children going to school or 

receiving basic immunization vaccinations. There are mixed views about the role of 

conditionalties in direct cash transfer schemes as they require follow-ups and monitoring, 

and as such additional administrative costs. One argument against cash transfer has 

been that they induce dependence. However, income supplements are very effective in 

the case of the extremely poor. These schemes can be implemented for the poorest and 

the most disadvantaged sections of the society. 

It is suggested here that for the extremely poor, direct cash transfer in the form 

of ‘social income’ may be administered to the first two deciles of the BPL population in 

the rural areas. It is important that the extremely poor have some minimum income to 

start with because of the need for meeting access cost and overcoming participation 

barriers to avail the benefit of other services provided by the government for health and 

education As noted in Table 6.4, the extent of leakage is nil up to the first two deciles of 

the BPL population. As a second check, the identified beneficiary may be endorsed by the 

village Panchayat. The amount of income may be determined by the number of male 

members including children multiplied by half the state-specific price adjusted poverty 

line (per person per month) and number of female members multiplied by the full 

amount of this poverty line (this is illustrative only). The money should be transferred on- 

172

line to post-office saving banks or rural banks or as a last resort through money orders 

direct to the household head. 

(ii) Scheme for Providing Income Generating Assets 

One income generating asset capable of producing income in the dwelling itself may be 

provided to any BPL family that asks for it. Such as asset can be operated by any 

member of the family in spare time and can provide valuable supplementary income for 

the family. Such an asset should require minimum maintenance. Recently in Rajasthan a 

scheme of providing electricity generating charkha (e-charkha) has been introduced 

successfully. The e-charkha is an improvised version of Ambar Charkha designed by 

Ekambarnath who hailed from Tamil Nadu. The e-charkha is used for making yarn as well 

as for lighting a bulb or producing moderate amount of electricity. The charkha has 

equipment to store electricity in its attachment to light up a room for 8 hours. Using the 

charkha Rs. 30- 45 can be earned by spinning the yarn. The e-charkha costs only Rs. 

8500 and the attachment for producing electricity cost Rs. 1500. A good part of these 

can be subsidised by the state government. 

7.5 District Level Poverty Reduction Strategy 

The district level poverty reduction strategy (DPRS) for rural areas needs to follow the 

same framework as the state level PRS and it needs to be dovetailed to the national and 

state level initiatives. At the district level both rural and urban PRS need to be 

formulated. Here, we focus on rural-DPRS 

a. Managing Macro Drivers 

District with high income deficiency are generally dependent on agricultural activities. 

Some basic industrial and service sector activity is needed to generate employment and 

multiplier effects. Location of an SEZ/Export oriented zone or attracting industry with 

special tax concessions will initiate the necessary stimulus. Availability of good road 

connectivity and power are also important ingredients. In these respects, state 

interventions are critical. District authorities need to involve private companies, NGOs, 

and local schools in ‘bottom of the pyramid’ initiatives suitable for their respective areas 

in production well as marketing activities. Such activities may relate to marketing of 

agricultural outputs and milk and fisheries products (e.g. ‘e-choupal’,) as well as chemical 

products that can be made in small to medium enterprises. 

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. Augmenting Fiscal Space 

Districts depend to a considerable extent on resource transfers from central as well as 

state governments. The State Finance Commission has also made recommendations from 

time to time. At present, in Tamil Nadu, the Third State Finance Commission is now 

deliberating on the issues of fiscal devolution to the local bodies. As far as rural areas are 

concerned, they depend to a large extent on transfers. However, tax and non-tax 

resources assigned to them remain under-exploited. The State Finance Commission may 

link some portion of its recommended devolution to local body’s own revenue effort with 

a view to augmenting the fiscal space available to the local bodies through transfers as 

well own revenue effort. Funds allocated by the Central Finance Commission for rural 

local bodies are at the state level. The state government has to allocate these among the 

rural bodies of the state. State government should follow a combination of need-based 

criteria (relative deficiencies) and incentive-based criteria (revenue effort) for dividing the 

allocated funds. The 9 percent allocation will be divided between the rural local bodies 

and urban bodies in the ratio 58:42. This 58 percent will be allocated to the village 

Panchayat, Panchayat Union and District Panchayat in the revised ration of 60:32:8 

during the 11th plan period. 

In the Eleventh Plan period, the GoTN is proposing to increase the finances for 

the local bodies from 8 percent of the states own revenue to 9 percent. The percentage 

of devolution is to be progressively increased to 10 percent over the plan period. This 

increase at one percent constitutes an increase of nearly Rs. 360 crore over the previous 

annual allocation of Rs 1224.76 crore. It has also been proposed that the entire Twelfth 

Finance Commission (TFC) grant will be allotted only to village panchayats. This TFC 

grant will be Rs. 174 crore every year with the overall anticipated fund flow over the plan 

period being Rs. 870 crore. 

More generally, it is expected that the districts relatively more deficient in or 

more of the MDG indicators will receive larger resources once the state level allocations 

under various departments are better aligned with indices of deficiency at the district 

level. 

c. Structuring Expenditure towards MDGs 

Most schemes administered by the district administration come with assigned funds. For 

their respective areas of deficiencies, district administration has to demand more 

resources from the higher tiers of government for increasing the share of funds in the 

required areas. 

174

d. Targeting 

As far as rural areas are concerned, targeting has to be geographic, moving from blocks 

to villages. Within the villages, specific household can be targeted. 

e. Efficiency 

There is clear scope for obtaining allocation efficiency through construction of relative 

deficiency indices in respect of income-poverty, health, education, and gender related 

indicators at the level of blocks. An approach similar to one suggested for the state level 

(allocation among districts) should be followed for block level allocations. It should 

depend on (a) relative extent of deficiency, and (b) share of beneficiary population. 

Some of the important reforms for implementation efficiency contemplated by 

the GoTN include: 

a. introduction of scale of pay for Panchayats Assistants who have been working only 

on consolidated wages; 

b. phone connections to be provided to all the Village Panchayats; 

c. computers to be installed in all Village Panchayats with provision for internet 

connectivity; 

d. providing manpower assistance through Makkal Nala Paniyalargal, technical 

assistants and computer assistants for better implementation of TN REGS. 

Vacancies in all categories to be filled up on war footing; and 

e. providing vehicles to all the Block Offices, with increased ceiling limit on fuel every 

month. 

The GoTN aims that the schemes under Panchayat Raj department and other 

departments such as Highways, Public Works, Social Welfare, Health, Education, 

Agriculture Engineering, TWAD among others will be dovetailed as far as possible into the 

Village Panchayats taken up under Anaithu Grama Anna Marumalarchi Thittam. The 

GoTN expects convergence of at least Rs.1 crore of funds under various Governmental 

schemes to each AGAMT Village Panchayat. 

f. Reforming Programmes 

While most programmes are designed from above, there is still scope for the 

district/block/village administration to work out specific schemes suited for their 

specialised needs. Gram panchayats have a role to play in ensuring that all eligible 

children go the schools and that teachers actually are present and teach. Much of the 

drop-out problem from primary schools has to be tackled by the local administration. 

175

Some supplementary role that GoTN schemes play relate to housing and 

employment. For the Indira Awas Yojana, the GoTN, in addition to unit cost of Rs. 

25000/27500 is committed to provide a sum of Rs. 12000 per house for RCC roofing 

apart from its matching share thereby providing a house with a value of Rs. 

37000/395000- to the poor family. The minimum plinth area of a house is 20 square 

metres. All new houses under IAY will have toilets and smokeless chulahs. 

The Tamil Nadu Rural Employment Guarantee Schemes, introduced in 2005-06 in 

six districts has been expanded to ten districts in 2007-08. In these districts, this 

programme will substitute the SGRY programme. GoTN that the scheme will cover the 

entire state during the Plan period. 

Formation of Panchayat Level Federation: Under Mahalir Thittam, a federation of 

SHGs is formed at the Village Panchayat Level called the Panchayat Level Federation 

(PLF) comprising of two representatives from each SHG in the Panchayat. The PLF 

provides a common platform for the SHGs to share their experiences and to voice their 

problems. 

For urban areas under Jawaharlal Nehru National Urban Renewal Mission 

(JNNURM), the Government of Tamil Nadu (GoTN) is committed to improve basic 

services. The main thrust of the Sub-mission BSUP (Basic services for urban poor) of 

JNNURM is on, the integrated development of slums through projects for providing 

shelter, basic services and other related civic amenities with a view to providing utilities 

to the urban poor. The funding pattern is 50:50 for BSUP between Government of India 

and State Government. The State budget commitment for JNNURM-BSUP is Rs. 300 crore 

for the plan period. 

Further, GoTN plans to construct houses for the urban slum families in towns 

Integrated Housing and Slum Development Programme (IHSDP), other than Chennai, 

Madurai and Coimbatore under this programme. This programme will be funded by 

Government of India and the State Government in the rate of 80:20 with a total cost of 

Rs. 1500 crore. An outlay of Rs. 300 crore has been provided as the State Government 

share under IHSDP during the plan period. The Eleventh Plan target for construction of 

houses under this scheme is 187500 houses. 

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7.6 Urban Poverty Reduction Strategy 

MDGs-based reduction of urban poverty for Tamil Nadu is going to have a large and 

growing significance. While an extensive array of rural poverty reduction schemes has 

been designed, similar emphasis has not been there for the urban poor. It is clear that 

people migrate to the urban areas for better income-earning opportunities as also for 

better education opportunities. The urban strategy has to cover both slum and non-slum 

areas. The hierarchical structure for designing an urban PRS-MASTER can be indicated as 

below. 

a. Managing Macro Drivers: Economic activities and employment opportunities in 

cities and urban agglomerations can be enhanced only by attracting investment in the 

respective areas. Urban infrastructure is the key to attracting such investment. The state 

government has to invest heavily in urban infrastructure, not only for the needs for the 

existing population but in a forward looking perspective. This will require development of 

wide-intersection free roads, network of higher education and technical education 

institutions, additional hospitals, additional power generation, and adequate water 

supply. Adequacy of power and skilled labour will provide stimulus to investment in the 

concerned area. Cities should be expanded around the periphery with ring roads and 

road networks. Location of industrial clusters around the periphery of towns and social 

infrastructure (hospitals, schools) will help generate necessary multiplier effects. 

b. Augmenting Fiscal Space: Urban bodies have a larger resource base than rural 

bodies. Still fiscal transfers should also be enhanced for them from the central and as 

well as the states governments. Urban bodies provide local public goods not only to their 

residents but also a large segment of floating population who may be commuting from 

nearby rural areas. 

The revenue of the Municipalities and Corporations is derived from following 

major sources: 

1. property tax, 

2. profession tax, 

3. Non-tax revenue like water charges, fees, rents etc., 

4. Assigned revenues like entertainment tax, surcharge on stamp duty, advertisement 

tax, and cable tax, 

5. Devolution of funds from State and Central Government (Based on State and Central 

Finance Commission Recommendations), and 

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6. loans from financial institutions and some of the larger municipal bodies can also 

raise funds from market from public through floating of Bonds. 

Strategies for the urban local government for raising own source revenue should 

include the following: 

1. fuller exploitation of property tax, vacant land tax, and development charges in the 

municipalities, 

2. augmenting the tax base of the slums by de-notifying the slums with adequate 

services and levy and collection of municipal and other taxes from these areas, 

3. levy of user charges for individual service connections (for water supply, sewerage, 

electricity, etc.) on full cost recovery basis in the slum areas, 

4. selling the land title (on full/part cost recovery basis, based on the economic profile 

of the beneficiaries) to raise capital for other capital works on slum upgrading, and 

5. raising additional rental income from property owned by the urban local bodies. 

The Twelfth Central Finance Commission has sanctioned “Specific Needs Grant” 

of Rs. 250 crore for slum development in Chennai and other towns in the State during 

2005-20. This should be efficiently utilized. 

The First and Second State Finance Commissions established the deficit in urban 

infrastructure in Tamil Nadu at around Rs.11250 crore, while some studies point out that 

the effective capacity of urban local bodies (ULBs) to invest in sustainable urban 

infrastructure over the next five years to be approximately Rs. 4245 crore. The GoTN’s 

Eleventh Plan document also notes that recognizing the need for continuing the reforms 

in urban governance and service delivery arrangements, and the capacity of the ULBs to 

absorb investment, Tamil Nadu Urban Development Plan (Third Phase) TNUDP III has 

been designed. TNUDP III is intended to consolidate the achievements of TNUDP II, and 

continue to improve urban infrastructure services in Tamil Nadu in a sustainable manner. 

Similarly, TUFIDCO, a State owned Organization, was incorporated to extend 

financial assistance to urban infrastructure schemes in Tamil Nadu. The State 

Government has also appointed TUFIDCO as a State level nodal agency for the centrally 

sponsored schemes. To ensure focus on total flow of funds through the schemes such as 

Jawaharlal Nehru National Urban Renewal Mission Programme, Urban Infrastructure 

Development Scheme for Small and Medium Towns, Mega City Programme, Integrated 

Development of Small and Medium Towns, Metropolitan Infrastructure Development 

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Fund, GoTN has created Tamil Nadu Infrastructure Development and Renewal Fund 

(TNUIDRF) for infrastructure development assistance to urban local bodies. 

c. Structuring Expenditure: The municipal budgets have to provide increased 

allocation for slum rehabilitation, city roads, and development. For undertaking capital 

expenditure on urban infrastructure, municipal debt may be utilized at least for the larger 

cities. As far as health and education are concerned, there are some hospitals and 

schools, which may be under the control of the city administration. Children living in slum 

areas are often forced to discontinue education and start doing some work. Hygienic 

conditions in slum areas are also a challenge. Major expenditure has to go for 

dismantling of illegal slums and rehabilitation activities. Location of new schools close to 

the clusters where poor may reside will also help. 

d. Targeting: The four tier targeting strategy (District-Cities/Town-Slum/Non-slum 

Zones/Wards-Households) should focus on towns of a certain size of population, and 

devise separate targeting strategies for the slum population and the poor in the non-slum 

areas. For the slum population, location-specific schemes may work. For non-slum 

population targeting can be for extremely poor households or individuals. Targeting slum 

population is more straightforward because the geographic location of the cluster is 

identifiable. Non-slum poor are diffused all over the urban agglomerations. Information 

from NGOs operating in the concerned areas may be valuable for reaching the urban 

non-slum poor. Slum children and children of non-slum poor should be the main targets 

for education related strategies. 

e. Enhancing Efficiency: Allocation of funds under different schemes should be 

according to the estimated number of poor in the slums and the extent of relative 

deficiency. For the non-slums poor, in the urban agglomerations separate schemes may 

be used. Here, well publicized self-targeting schemes may be most effective. Allocations 

should be made separately under respective criteria for health, education, income, and 

gender related schemes. 

Some specific efficiency enhancing steps are suggested below. 

i. Focus has to be on rehabilitation rather than marginal improvement of the slums 

where they exist. 

ii. Undertake notification and de-notification of slums as this exercise may have 

been undertaken quite some time back and several slums may have been 

upgraded under various schemes. 

179

iii. Coordinated efforts to address and integrate slum upgrading in the overall city 

development strategy. 

iv. For the slums on private tenable lands, the respective ULB should acquire the 

land based on negotiated compensation. 

v. Minimize relocation distances to reduce the impact on livelihoods and provide 

some choice of alternative sites and alternative rehabilitation packages to the 

affected people. 

vi. Ensure adequate services and public transportation to all resettlement sites, prior 

to settlement; consider providing facilities like free bus-cum-rail pass for some 

initial period. 

vii. Provide for costs in case of involuntary resettlement in case of objectionable 

slums. 

viii. Constitute a multi-disciplinary task force, particularly in Municipal Corporations 

and bigger Municipal towns to carry out routine eviction activities. 

ix. Establish and enhance a dedicated Slum Development Funds to finance various 

slum upgrading initiatives. 

f. Reforming Programmes: There are several programmes for urban poverty reduction 

introduced by the central government. The state government has to devise its own 

programmes as the trends of urban poverty in Tamil Nadu require forward-looking 

attention now. Some of the existing programmes having a bearing on urban poverty 

reduction are listed in Table 7.2. 

Table 7.2: Urban Poverty Reduction Programmes 

Income Generating Asset Generating 

Area Based Schemes 

Schemes 

Schemes 

Swarna Jaynti Shahri Rozgar 

Yojana(SJSRY) 

Jawahar Lal Nehru Urban 

Renewal Mission (JNNURM) 

Environment Improvement 

of Urban Slums (EIUS) 

Nehru Rozgar Yojana (NRY) Indira Awas Yojana (IAY) Integrated Development of 

Small and Medium Towns 

(IDSMT) 

Prime Minister’s Integrated 

Urban Poverty Eradication 

Programme (PMIUPEP 

Small Enterprise for Urban 

Poor (SEUP) 

Integrated Low Cost 

Sanitation Scheme (ILCS) 

Urban Basic Services for the 

Poor (USBSP) and 

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Comprehensive Slum 

Improvement Programme 

(CSIP) 

Urban Community 

Development (UCD)

Some initiative by Government of Tamil Nadu include the setting up of Tamil 

Nadu Urban Development Fund (TNUDF) for bridging the demand-supply gap by linking 

ULB’s with capital markets and to instill a sense of market discipline. The TNUDF is on a 

‘Public-Private Partnership' mode, with the participation of Industrial Credit and 

Investment Corporation of India (ICICI), Housing Development Finance Corporation 

(HDFC) and Infrastructure Leasing & Financial Services (IL&FS). Some specific steps of 

the state level initiatives are listed below. 

While urban poverty reduction languished for many years, in recent times a new 

thrust and priority has been given to this growing problem. Important among the new 

initiatives are the Jawaharlal Nehru Urban Renewal Mission, a modified Swarna Jayanti 

Shahari Rojgar Yojana, and the Rajiv Awas Yojana (RAS). 

Rajiv Awas Yojana envisages tackling the issues of inclusive growth and slumfree-cities, 

including basic amenities and affordable housing to the existing slum-dwellers 

as well as new additions to the number of poor due to urban growth. It emphasizes that 

States/UTs develop a Slum–free State/UT/Cities vision and develop a legal framework for 

regularizing space and accord property rights to the slum-dwellers as well as create 

space for the poor and new entrants to cities as they grow. It proposes a four-pronged 

approach: 

(i) ‘in situ’ development programmes with basic amenities and an enabling strategy for 

affordable housing in the case of ‘tenable’ slums, with reconfiguration to the extent 

possible based on town planning norms of the State/UT concerned; 

(ii) development in ‘relocation’ sites with affordable housing and access to all basic 

amenities, including easy access of public transportation to commute to jobs for 

rehabilitating the ‘untenable’ slums; efforts will first be made to re-examine the issue 

of so-called ‘untenability’ and whether the untenable slums could be settled in 

tenable slums with densification based on city-wise slum upgrading approach; 

(iii) housing and civic development programmes in peripheries of existing cities and 

towns to accommodate the urban poor including migrants, with a focus on publicprivate 

partnerships and requiring/incentivising developers to adopt inclusive zoning 

and reserve land/houses for the poor; and 

(iv) integrated-and-inclusive new townships around emerging hubs of industry, trade and 

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commerce, including Special Economic Zones (SEZs) with adequate space for housing 

the poor and informal sector workers as part of the location policy for those entities. 

Under the RAS, urban local bodies will be required to 

1. conduct slum and BPL household surveys, priorities slums identify beneficiaries, 

explain schemes and issue biometric ID cards; 

2. implement the RAS in convergence with Jawaharlal Nehru National Urban 

Renewal Mission, including the scheme of Affordable Housing along with other 

programmes, dovetailing Swarna Jayanti Shahari RojgarYojana to address the 

concerns of employment and skill development of the urban poor in addition to 

shelter; and 

3. induce public private partnership in construction, especially new construction of 

social housing by identifying land or deciding on models for public-private – 

partnership with land of the private parties. 

Wherever feasible, additional land for urban development will need to be 

released by the construction of outer ring roads. The construction of the ring roads and 

extension of inner city road networks themselves will create jobs for skilled as well as 

unskilled labour, release land for other economic activities between the ring road and the 

inner city or otherwise extended urban areas while preventing formation of additional 

slums through the strategy of low-cost housing. However, separate financing will be 

required for the development of physical and social infrastructure. 

To develop a suitable city level strategy RAY will take up an ‘equitable cities 

campaign’ in select cities /municipalities. These cities will be enable to draw up 

development and action plans within the state specific plan/policy, and to operationalise 

them to upgrade or rehabilitate existing slums and make new land and housing available 

for the urban poor within the formal planning system at least at the rate of their growth 

in population. The RAY emphasizes taking a whole city (preferably city agglomeration) 

approach, mapping all existing slums and deficiencies therein, and undertaking a 

complete household biometric survey with identification numbers. 

The objectives of the revised (with modified guidelines) Swarna Jayanti Shahari 

Rojgar Yojana (SJSRY) are: 

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• Addressing urban poverty alleviation through gainful employment to the urban 

unemployed or underemployed poor by encouraging them to set up self-employment 

ventures (individual or group), with support for their sustainability; 

• Supporting skill development and training programmes to enable the urban poor 

have access to employment opportunities opened up by the market or undertake to 

self-employment; and 

• Empowering the community to tackle the issues of urban poverty through suitable 

self-managed community structures like Neighbourhood Groups (NHGs), 

Neighbourhood Committees (NHC), and Community Development Society (CDS). 

The delivery of inputs under the Scheme shall be through the medium of urban 

local bodies and community structures. Thus, Swarna Jayanti Shahari RojgarYojana seeks 

to strengthen these local bodies and community organizations to enable them address 

the issues of employment and income generation facing the urban poor. 

It may however be remembered that slum clearance schemes in India are quite 

old. The success so far has been limited because of legal, administrative, and financial 

hurdles. Also, the approach so far has not been holistic. Slums require to be viewed as 

part of the larger problem of housing and mass deprivation that confronts a city. There 

has to be realistic recognition of the constraints so that measures are devised to 

overcome these. Accessing urban land for housing the poor in a high-value real estate 

market will continue to be a serious challenge. There will be an urgent need to create 

land banks through appropriate land-use zoning. Substantial financial allocations from the 

central, state, and local governments will also be required. 

Given this context, the new initiative in terms of these two programmes are 

welcome and would provide a significant breakthrough if these are followed up by a citybased 

strategy for reducing urban poverty supplemented by effective support by the 

state governments. 

An action plan for poverty reduction for tackling slums, health and education, 

services, and employment and livelihood was discussed in Table 6.14. 

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Income Generating Activities 

a. For the urban poor, small and micro enterprises can be an important source of 

income generation. Providing advice and infrastructure can increase the productivity 

of micro enterprises and their ability to operate in accordance with the safety and 

hygiene regulations. 

b. Providing access to credit to the slum dwellers including micro finance and through 

self help groups. 

c. Provision of vocational training facilities. 

d. Providing improved access to raw materials and marketing support. 

e. Development of urban agriculture, which can not only be an income-generating 

activity but will have a positive impact on the urban environment by creating green 

spaces and reusing waste water and compost from solid waster. 

f. Women amongst relocated families may be organized into Self Help Groups; and 

special drives of socio-economic activities such as SSA, SJSRY, etc. may be taken. 

g. Home-based production (or cottage industry) is also an important income-generating 

activity among the poor. 

h. City authorities can provide infrastructure services (electricity, telecommunications, 

water, and sanitation) which would increase the efficiency and productivity of homebased 

activities; 

i. Providing information and advisory services in relation to markets for the products. 

Information and Coordination 

i. Institutionalized sharing of information on issues relevant to the urban poor between 

urban poor communities, different levels of government, non-governmental 

organizations and the private sector. 

ii. Regular updating of database on the slums and socio-economic profile of the slum 

population through surveys to ensure effectiveness of the upgrading schemes. 

Creation of Assets 

a. Housing finance: low-income households do not have access to housing credits as 

commercial financial institutions usually have little interest in lending to low-income 

households; state government may need to develop a scheme of for subsidized 

housing finance. 

b. Most of the urban poor do not have tenure security because their dwellings are built 

on public land, private property not belonging to the owner; or built on shared title 

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land. There is need to develop a scheme that will facilitate granting of tenure to 

residents on tenable sites owned or acquired by government. 

c. Government may acquire land as ownership of most of slums on private lands is 

either unclear or embroiled in court cases. 

Basic Services to Urban Poor 

i. A major constraint that the urban poor face in seeking to improve their livelihoods is 

their limited access to basic municipal services: water supply, sanitation, drainage, 

garbage collection, access roads and pathways, street lighting and flood protection. 

The city government has to ensure that services like water supply, sanitation and 

electricity are provided on individual household basis; this will also facilitate collection 

of user charges. 

ii. Service provision in slums should be integrated with other city level schemes to 

achieve economy and scale. 

iii. Health insurance should be widened to cover curative health care. 

iv. Education through non-formal and community management mode should be 

promoted. 

Considering that migration to urban areas is going to continue, anticipatory steps in 

terms of planned building up of satellite townships at the periphery of cities that are well 

connected to the city centre will help in curbing the creation of new slums. 

185

186

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194

APPENDIX TABLES 

Appendix Table 1.1: Millennium Development Goals 


Indicators 

Goal 1: Eradicate Extreme Poverty and Hunger 

Target 1: Halve the proportion of 

people whose income is less than 1 

dollar a day 

Target 2: Halve the proportion of 

people who suffer from hunger 

Goal 2: Achieve Universal Primary Education 

Target 3: Ensure that all boys and girls 

will complete a full course of primary 

schooling 

Goal 3: Promote Gender Equality and Empower Women 

Target 4: Eliminate gender disparity in 

primary and secondary education 

preferably by 2005 and to all levels by 

2015 

Goal 4: Reduce Child Mortality 

Target 5: Reduce by two-thirds, 

between 1990 and 2015, the under-five 

mortality rate 

Goal 5: Improve Maternal Health 

Target 6: reduce by three-quarters, 

between 1990 and 2015, the mortality 

ratio. 

195 

1. Proportion of population below $1 (PPP) per 

day 

2. Poverty Gap Ratio (=incidence x depth of 

poverty) 

3. Share of poorest quintile in National income or 

consumption 

4. Prevalence of underweight children (under 5 

years of age) 

5. Proportion of population below minimum level 

of dietary energy consumption 

6. Net enrolment ratio in primary education 

7. Proportion of pupils starting grade 1 who reach 

grade 5 

8. Literacy rate of 15-24 years old 

9. Ratio of girls to boys in primary, secondary and 

tertiary education 

10. Ratio of literate females to males of 15-24 

year olds 

11. Share of women in wage employment in the 

non-agricultural sector 

12. Proportion of seats held by women in national 

parliament 

13. Under-five mortality rate 

14. Infant mortality rate 

15. Proportion of 1 year old children immunized 

against measles 

16. Maternal mortality ratio 

17. Proportion of births attended by skilled health 

personnel

Appendix Table 1.1 (contd.): Millennium Development Goals 


Indicators 

Goal 6 Combat HIV/AIDS, Malaria and Other Diseases 

Target 7: Have halted by 2015, and 

begun to reverse, the spread of HIV/ 

AIDS 

Target 8: Have halted by 2015, and 

begun to reverse, the incidence of 

malaria and other major diseases 

Goal 7: Ensure Environmental Sustainability 

Target 9: Integrate the principles of 

sustainable development into country 

policies and programs and reverse the 

loss of environmental resources 

Target 10: Halve, by 2015, the 

proportion of people without sustainable 

access to safe drinking water 

18. HIV prevalence among 15-24 year old 

pregnant women 

19. Contraceptive prevalence rate 

20. Number of children orphaned by HIV/ AIDS 

21. Prevalence and death rates associated with 

malaria 

22. Proportion of population in malaria risk areas 

using affective malaria prevention and treatment 

measures 

23. Prevalence and death rates associated with 

tuberculosis 

24. Proportion of TB cases detected and cured 

under DOTS (Directly Observed Treatment Short 

Course) 

25. Proportion of land area covered by forest 

26. Land area protected to maintain biological 

diversity 

27. GDP per unit of energy use (as proxy for 

energy efficiency) 

28. Carbon dioxide emissions (per capita) 

(Plus two figures of global atmospheric pollution: 

ozone depletion and the accumulation of global 

warming gases) 

29. Proportion of population with sustainable 

access to an improved water source 

Target 11: By 2020, to have achieved a 

significant improvement in the lives of 

at least 100 million slum dwellers 

30. Proportion of people with access to improved 

sanitation 

31. Proportion of people with access to secure 

tenure 

(urban/ rural dis-aggregation of several of the 

above indicators may be relevant for monitoring 

improvement in the lives of slum dwellers) 

196



Indicators 

Goal 8: Develop a Global Partnership for Development 

Target 12: develop further an open, 

rule-based, predictable, nondiscriminatory 

trading and financial 

system; 

Includes a commitment to good 

governance, development, and poverty 

reduction- both nationally and 

internationally 

Target 13: Address the Special Needs of 

the Least Developed Countries: 

Include: tariff and quota free access for 

LDC exports; enhanced programme of 

debt relief for HIPC and cancellation of 

official bilateral debt; and more 

generous ODA for countries committed 

to poverty reduction 

Target 14: Address the Special Needs of 

landlocked countries and small 

developing sates 

(through Barbados Programs and 22 nd 

General Assembly Provisions) 

Target 15: Deal comprehensively with 

debt problems of developing countries 

through national and international 

measures in order to make debt 

sustainable in the long term 

Some of the indicators listed below will be 

monitored separately for the Least Developed 

Countries (LDC’s), Africa, landlocked countries 

and small island developing states. 

Official Development Assistance 

32. Net ODA as percentage of DAC donors’ GNI 

(targets of 0.7% in total and 0.15% for LDC’s) 

33. Proportion of ODA to basic social services 

(basic education, primary health care, nutrition, 

safe drinking water and sanitation) 

34. Proportion of ODA that is untied 

35. Proportion of ODA for environment in small 

island developing states 

36. Proportion of ODA for transport sector in 

landlocked countries 

Market Access 

37. Proportion of exports (by value and excluding 

arms) admitted free of duties and quotas 

38. Average tariffs and quotas on agricultural 

products and textiles and clothing 

39. Domestic and export agricultural subsidies in 

OECD countries 

40. Proportion of ODA provided to help build trade 

capacity 

Debt Sustainability 

41. Proportion of official bilateral HIPC debt 

cancelled 

42. debt service as a percentage of exports of 

goods and services 

43. Proportion of ODA provided as debt relief 

44. Number of countries reaching HIPC decision 

and completion points 

197



Target 16: In co-operation with 

developing countries, develop and 

implement strategies for decent and 

productive work for youth. 

Indicators 

45. Unemployment rate of 15-24 year olds 

Target 17: In cooperation with 

pharmaceutical companies, provide 

access to affordable, essential drugs in 

developing countries 

Target 18: In co-operation with the 

private sector, make available the 

benefits of new technologies, especially 

information and communications 

46. Proportion of population with access to 

affordable essential drugs on a sustainable basis 

47. Telephone lines per 1000 people 

48. Personal computers per 1000 people 

Other indicators TBD 

Source: United Nations Development Organisation. 

Note: The selection of indicators for Goals 7 and 8 is subject to further refinement. 

198

Appendix Table 1.2 (a): Poverty Line and Poverty Ratio: Tamil Nadu and All 

India 

Poverty Line 

(Current 

Poverty Line 

(1993-94 

Per Day 

Average 

Per Day 

Average 

Poverty Ratio 

(%) 

Year Prices) Prices) (1993-94 

Prices) 

(PPP $) 

Rura 

l 


Tamil Nadu 

1973- 

234.3 267.9 

74 45.09 51.54 7 0 7.81 8.93 1.11 1.27 57.4 49.4 54.9 

1977- 

228.9 271.0 

78 56.62 67.02 8 4 7.63 9.03 1.09 1.29 57.7 48.7 54.8 

1983- 

227.1 

84 96.15 12.03 2 28.42 7.57 0.95 1.08 0.13 54.0 47.0 51.7 

1987- 118.2 165.8 207.9 291.6 

88 

3 0 9 8 6.93 9.72 0.99 1.38 45.8 38.6 43.4 

1993- 196.5 296.6 196.5 296.6 

94 

3 3 3 0 6.55 9.89 0.93 1.41 32.5 39.8 35.0 

1999- 307.6 475.6 201.1 310.9 

00 

4 0 2 3 6.70 10.36 0.95 1.48 20.6 22.1 21.1 

2004- 351.8 547.4 195.4 304.1 

05 

6 2 8 1 6.52 10.14 0.93 1.44 22.8 22.2 22.5 

1973- 

74 49.63 56.76 

257.9 

7 

1977- 

229.8 

78 56.84 70.33 7 

1983- 

115.7 211.4 

84 89.50 0 2 

1987- 115.2 162.2 202.6 

88 

0 0 6 

1993- 205.8 281.4 205.8 

94 

4 0 4 

1999- 327.5 454.1 214.1 

00 

6 0 5 

2004- 356.3 538.6 197.9 

05 

0 0 4 

Source: Planning Commission. 

Urba 

n 

Rura 

l 

Urba 

n 

Rura 

l 

Urba 

n 

Tota 

l 

India 

295.0 

3 8.60 9.83 1.22 1.40 56.4 49.0 54.9 

284.4 

2 7.66 9.48 1.09 1.35 56.4 45.2 51.3 

273.3 

1 7.05 9.11 1.00 1.30 45.7 40.8 44.5 

285.3 

5 6.76 9.51 0.96 1.35 39.1 38.2 38.9 

281.4 

0 6.86 9.38 0.98 1.34 37.3 32.4 36.0 

296.8 

7 7.14 9.90 1.02 1.41 27.1 23.6 26.1 

299.2 

2 6.60 9.97 0.94 1.42 28.3 25.7 27.5 

199

States 

Rura 

l 

Appendix Table 1.2 (b): State wise Poverty Line (Rs.) 

1973-74 1977-78 1983-84 1987-88 1993-94 1999-00 2004-05 

Urba Rura Urba Rura Urba 

Urba 

Urba 

Urba 

n l n l n Rural n Rural n Rural n Rural 

Andhra 

Pradesh 41.7 54.0 50.9 69.1 72.7 106.4 91.9 151.9 163.0 278.1 262.9 457.4 293.0 542.9 

Assam 49.8 50.3 60.3 61.4 98.3 97.5 127.4 126.6 232.1 212.4 365.4 344.0 387.6 378.8 

Bihar 57.7 61.3 58.9 67.3 97.5 111.8 120.4 150.3 212.2 238.5 333.1 379.8 354.4 435.0 

Jharkhand - - - - - - - - - - - - 366.6 451.2 

Gujarat 47.1 62.2 54.7 72.4 83.3 123.2 115.0 173.2 202.1 297.2 318.9 474.4 353.9 541.2 

Haryana 50.0 52.4 59.4 66.9 88.6 103.5 122.9 143.2 233.8 258.2 362.8 420.2 414.8 504.5 

Karnataka 47.2 58.2 52.0 68.9 83.3 120.2 104.5 171.2 186.6 302.9 309.6 511.4 324.2 599.7 

Kerala 51.7 62.8 58.9 67.1 99.4 122.6 130.6 163.3 243.8 280.5 374.8 477.1 430.1 559.4 

Madhya 

Pradesh 50.2 63.0 56.3 74.4 83.6 122.8 107.0 178.4 193.1 317.2 311.3 481.7 327.8 570.2 

Chhattisgar 

h - - - - - - - - - - - - 322.4 560.0 

Maharashtra 50.5 59.5 58.1 74.0 88.2 126.5 115.6 189.2 194.9 328.6 318.6 539.7 362.3 665.9 

Orissa 46.9 59.3 58.9 72.4 106.3 124.8 121.4 165.4 194.0 298.2 323.9 473.1 325.8 528.5 

Punjab 50.0 51.9 59.4 65.7 88.6 101.0 122.9 145.0 233.8 253.6 362.7 388.2 410.4 466.2 

Rajasthan 51.0 60.0 57.5 72.0 80.2 113.6 117.5 165.4 215.9 280.9 344.0 465.9 374.6 559.6 

Tamil 

Nadu 45.1 51.5 56.6 67.0 96.2 120.3 

118. 

2 165.8 

196. 

5 296.6 

307. 

6 475.6 

351. 

9 547.4 

Uttar 

Pradesh 48.9 57.4 54.2 69.7 83.9 110.2 114.6 154.2 213.0 258.7 336.9 416.3 365.8 483.3 

Uttarakhand - - - - - - - - - - - - 478.0 637.7 

West Bengal 54.5 54.8 63.3 67.5 105.6 105.9 129.2 150.0 220.7 247.5 350.2 409.2 382.8 449.3 

India 49.6 56.8 56.8 70.3 89.5 115.7 115.2 162.2 205.8 281.4 327.6 454.1 356.3 538.6 

Source: Planning Commission (2003, 2007). 

Urba 

n 

200

Appendix Table 1.3: Poverty Gap Estimates: Selected States 

(Percent) 

States 

Official Methodology 

Adjusted Estimates 

1987-88 1993-94 1999-00 1987-88 1993-94 1999-00 

Rural 

Andhra Pradesh 4.4 2.9 1.8 8 5.8 4.8 

Gujarat 5.5 4.1 2.2 8.4 6.8 3.8 

Haryana 3.6 5.6 1.3 2.8 3.0 0.7 

Karnataka 7.9 6.3 2.7 10.5 8.6 6.1 

Kerala 6.4 5.6 1.5 4.8 3.9 1.7 

Maharashtra 9.6 9.3 4.4 10.8 11.2 7.6 

Punjab 2.0 1.9 0.8 1.0 1.0 0.3 

Tamil Nadu 12.6 7.3 3.8 13.7 9.1 4.6 

Uttar Pradesh 9.9 10.4 5.8 7.5 5.8 3.9 

All India: Rural 9.4 8.4 5.2 9.2 7.0 5.2 

Urban 


Haryana 3.6 3.0 2.0 2.3 1.9 0.7 

Karnataka 14.1 11.4 5.6 5.7 4.5 2.1 

Kerala 10.4 5.5 3.9 4.5 2.7 1.7 

Maharashtra 12.3 10.1 6.7 5.3 4.6 2.8 

Punjab 2.3 1.7 0.6 1.0 1.1 0.4 

Tamil Nadu 11.5 10.2 4.8 6.2 4.5 2.0 

All India: Urban 10.4 8.3 5.2 4.8 3.7 2.3 


Note: The poverty gap indexes labelled “official methodology” are computed from the unit record data using 

the official poverty lines, and using rules for assigning poverty gap indexes to small states (and to 

Jammu & Kashmir) that mirror the rules used by the Planning Commission for computing the official 

head count ratios. The adjusted indexes use the recomputed price indexes to update the poverty lines, 

and correct for the changes in questionnaire design in the 55 th Round. All numbers are directly 

computed from poverty lines and unit record data for each state, and the all India estimates are 

calculated as weighted averages of the state estimates. 

201

Appendix Table 1.4: Some Summary Statistics on Calorie Intake and Poverty 

States 

Average 

Calorie Intake 

Per Capita Per 

Day (Kcal) 

Median 

Calorie Intake 

Per Capita Per 

Day (Kcal) 

Head Count 

Ratios (Percent 

Consuming 

Below 2400 

Calories Per 

Day) 

Head Count 

Ratios of 

Poverty 

(Percent with 

Below OPL 

Incomes) 

1983 1999-00 1983 1999-00 1983 1999-00 1983 1999-00 

Andhra Pradesh 2204 2021 1988 1955 68.5 80.7 35.8 11.1 

Bihar 2189 2121 2081 2034 67.6 74.9 60.5 44.0 

Gujarat 2113 1986 1988 1904 72.6 80.5 39.0 13.2 

Haryana 2554 2455 2325 2313 54.1 55.1 27.5 8.3 

Himachal 

2636 2454 2499 2307 44.5 56.5 23.9 8.0 

Pradesh 

Jammu & 2569 2631 2480 2577 44.5 39.7 31.6 4.0 

Kashmir 

Karnataka 2260 2028 2097 1905 64.0 78.9 40.0 17.4 

Kerala 1884 1982 1749 1904 81.5 81.2 48.5 9.4 

Madhya Pradesh 2323 2062 2175 1932 62.5 78.4 53.7 37.1 

Maharashtra 2144 2012 2021 1926 73.1 83.3 54.6 23.7 

Orissa 2103 2119 1995 2051 70.9 74.6 66.2 48.0 

Punjab 2677 2381 2479 2221 46.2 62.8 18.5 6.4 

Rajasthan 2433 2425 2324 2292 54.2 56.7 46.7 13.7 

Tamil Nadu 1861 1826 1720 1727 80.6 86.5 59.1 20.6 

Uttar Pradesh 2399 2327 2252 2176 58.4 64.5 50.8 31.2 

West Bengal 2027 2095 1902 2009 76.0 75.6 66.7 31.9 


202

Appendix Table 1.5: Head Count Ratios of Calorie Deprivation, Alternative Norms 

States 2200 Norm 1800 Norm 2700 (Per 

Consumer Unit 

Norm) 

1983 1999-00 1983 1999-00 1983 1999-00 


Bihar 56.9 62.4 32.4 32.5 53.3 60.3 

Gujarat 63.8 70.4 36.6 41.0 62.0 68.4 

Haryana 42.8 43.5 19.3 18.4 40.1 44.5 

Himachal Pradesh 33.8 42.7 14.8 12.1 30.3 40.7 

Jammu & Kashmir 31.9 28.9 13.0 7.3 30.4 27.6 

Karnataka 55.2 69.9 35.7 41.8 53.2 68.6 

Kerala 74.0 70.3 53.2 42.8 72.3 67.2 

Madhya Pradesh 51.6 68.0 24.9 38.5 47.9 66.7 

Maharashtra 61.6 70.5 34.2 39.2 58.8 69.2 

Orissa 60.6 61.7 35.1 29.1 58.7 60.4 

Punjab 36.8 48.1 19.8 20.6 35.6 46.0 

Rajasthan 43.4 43.0 22.7 15.5 40.2 40.1 

Tamil Nadu 74.6 78.7 54.4 55.4 72.7 77.7 

Uttar Pradesh 47.1 52.0 24.0 23.0 43.3 48.7 

West Bengal 67.3 63.3 43.8 34.1 67.0 64.2 


203

Appendix Table 1.6: Progress towards Achieving the Poverty Goals 

Details 

Value in 

1990 

MDG Target 

Value in 

2015 

Average 

Annual 

Growth Rate 

Projected 

Value in 

2015 

Status 

Projected 

Year of 

Achieving 

Target 

Poverty Ratio* 

India 38.70 19.35 -0.0241 21.02 Off-track 2018.4 

Tamil Nadu 39.53 19.76 -0.0394 14.45 On-track 2007.2 

Rural Poverty* 



Urban Poverty* 



Human Poverty Index $ 



Malnutrition: % of Underweight Children 0-3 Years# 

India (Rural) 57.29 28.64 -0.0174 36.93 Off-track 2029.5 

Tamil Nadu (Rural) 60.26 30.13 -0.0534 15.30 On-track 2002.6 

India (Urban) 46.24 23.12 -0.0228 25.96 Off-track 2020 

Tamil Nadu(Urban) 36.32 18.16 -0.0093 28.74 Off-track 2063.9 

% of Children (0-5 Years) Undernourished@ 


Tamil Nadu 48.44 24.22 -0.0214 28.18 Off-track 2022 

Literacy Rate (%) : Person** 

India 51.09 N.A 0.0218 87.68 N.A 

Tamil Nadu 61.67 N.A 0.0161 91.90 N.A 

Literacy Rate (%) : Female ** 

India 38.09 N.A 0.0317 83.14 N.A 

Tamil Nadu 50.15 N.A 0.0230 88.54 N.A 

Gross Enrolment at Primary$$ 

India 99.43 N.A 0.0067 117.52 N.A 

Tamil Nadu 135.03 N.A -0.0080 110.48 N.A 

Ratio of Girls to Boys in Primary$$ 

India 0.71 1 0.0135 0.98 Off-track 2016 


Drop out Rate at Primary Level##^ 

India 44.13 0 -0.0348 18.23 Off-track 

Tamil Nadu 20.46 0 -0.0569 4.734 Off-track 

Drop out Rate at Middle School## 

India 61.30 0 -0.0061 52.6 Off-track 

Tamil Nadu 42.40 0 -0.0171 27.50 Off-track 

IMR 



Rural IMR 



204

Appendix Table 1.6 (contd.): Progress towards Achieving the Poverty Goals 

Details 

Value in 

1990 

MDG 

Target 

Value in 

2015 

Average 

Annual 

Growth 

Rate 

Project 

ed 

Value 

in 

2015 

Status 

Projected 

Year of 

Achieving 

Target 

Under 5 Mortality Rate ^ 



Children (12-23 months) Received Measles Vaccine (%) 



% Births Attended by Skilled Health Personal*** 



Institutional Births 


Tamil Nadu 61.00 100 0.0266 117.5 On-track 2008 

% Currently Married Women (15-49) Use Contraceptive*** 



% Household Access Safe Drinking Water (Total)### 

India 60.9 80.5 0.0226 106.5 On-track 2002 


% Household Access Safe Drinking Water (Rural) 

India 54.0 77 0.0281 107.8 On-track 2002 


% Households with Toilet/Latrine Facility*** 

India 28.36 64.2 0.0303 59.8 Off-track 2017 

Tamil Nadu 27.98 63.9 0.0250 51.9 Off-track 2023 

Source: NFHS-1 (1992-93), NFHS-2 (1998-99) and NFHS-3 (2005-06); Economic Survey 2007-08 

Note: * Using figures for 1993-94 (V 1 ) and 2004-05 (V 2 ), the annual compound growth rate, r was computed 

by the formula: r = (V 2 / V 1 - 1). Using r as the discounting rate, the value in 1990 (V 0 ) is obtained and 

the half of this 1990 value is considered as the target value (V 3 ). Projected value in 2015 (V 4 ) is 

obtained by the compounding formula: V 4 = 1990*(1+r) 25 . Projected year of attainment of the target 

(n) is computed by: n = Ln (V 3 /V 0 ) / Ln (1+r). $ 1990 and 2000 values are used in the calculations; 

# 1991-92 and 2000-01 values are used. @ 1992-93 and 1998-99 figures are used; **1991 and 2001 

figures used; $$1990-91 and 2006-07 data used;## 1991-92 and 2000-01 data used. *** NFHS-1 

(1992-93), NFHS-2 (1998-99) and NFHS-3 (2005-06); ### Economic Survey 2007-08; ^ Office of 

Registrar General of India; ##^ 1991-92 and 2006-07 data are used. 

205

Table 1.7: Educational Indicators 

States 

HDI 

Gender 

Disparity 

Index (GDI) 

Literacy 

Female 

Literacy 

Primary 

Enrolment 

(2004-05) 

1991 2001 1981 1991 1991 2001 1991 2001 

Andhra Pradesh 0.377 0.416 0.744 0.801 44.06 60.5 32.72 50.4 96.7 

Assam 0.348 0.386 0.462 0.575 52.89 63.3 43.03 54.6 105.2 

Bihar 0.308 0.367 0.471 0.469 38.48 47 22.89 33.1 83.8 

Jharkhand 53.6 38.1 94.8 

Gujarat 0.431 0.479 0.723 0.714 61.29 69.1 48.64 57.8 118.7 

Haryana 0.433 0.509 0.536 0.714 55.85 67.9 40.47 55.7 82.2 

Karnataka 0.412 0.478 0.707 0.753 56.04 66.6 44.34 56.9 107.1 

Kerala 0.591 0.638 0.872 0.825 89.81 90.9 86.13 87.7 93.6 

Madhya 

Pradesh 0.328 0.394 0.664 0.662 44.2 63.7 28.85 50.3 144.0 

Maharashtra 0.452 0.523 0.74 0.793 64.87 76.9 52.32 67.0 110.4 

Chhattisgarh 64.7 51.9 131.8 

Orissa 0.345 0.414 0.547 0.639 49.09 63.1 34.68 50.5 129.7 

Punjab 0.475 0.537 0.688 0.71 58.51 69.7 50.41 63.4 77.2 

Rajasthan 0.347 0.424 0.65 0.692 38.55 60.4 20.44 43.9 121.2 

Tamil Nadu 0.466 0.531 0.71 0.813 62.66 73.5 51.33 63.4 118.4 

Uttar Pradesh 0.314 0.388 0.447 0.52 41.6 56.3 25.31 42.4 107.5 

Uttaranchal 71.6 59.6 117.7 

West Bengal 0.404 0.472 0.556 0.631 57.7 68.6 46.56 59.6 112.1 

All-India GDP 0.381 0.472 0.62 0.676 52.21 64.8 39.29 53.7 108.6 

Source: For primary enrolment, Economic Survey 2007-08; Literacy rates from Census of India (2001), HDI 

and GDI from National Human Development Report 2001. 

206

Appendix Table 1.8: Women’s Malnutrition across Major States in India: 2005-06 

(Percent) 

BMI Anemia CED and Anemia 

States CED Overweight Moderate Any Both Either Neither 

or Obese or Severe 

Kerala 18.0 28.1 7.1 32.8 7.6 35.5 56.9 

Punjab 18.9 29.9 11.8 38.0 8.1 40.6 51.3 

Tamil Nadu 28.4 20.9 15.8 53.2 16.7 47.9 35.3 

Uttaranchal 30.0 12.8 14.8 55.2 18.1 48.7 33.1 

Haryana 31.3 17.4 18.5 56.1 18.5 49.6 31.9 

Andhra Pradesh 33.5 15.6 23.9 62.9 22.5 51.3 26.2 

Karnataka 35.5 15.3 17.1 51.5 19.8 46.9 33.3 

Uttar Pradesh 36.0 9.2 14.7 49.9 18.9 47.6 33.5 

Maharashtra 36.2 14.5 15.6 48.4 19.0 46.1 34.9 

Gujarat 36.3 16.7 19.1 55.3 22.8 45.5 31.7 

Assam 36.5 7.8 24.7 69.5 26.2 53.3 20.5 

Rajasthan 36.7 8.9 17.9 53.1 20.2 48.5 31.2 

West Bengal 39.1 11.3 17.4 63.2 27.1 48.2 24.7 

Orissa 41.4 6.6 16.3 61.2 27.5 47.2 25.3 

Madhya Pradesh 41.7 7.6 15.1 56.0 25.2 47.0 27.8 

Jharkhand 43.0 5.3 19.9 69.4 31.2 50.1 18.7 

Chhattisgarh 43.4 5.6 17.6 57.5 26.5 47.3 26.2 

Bihar 45.1 4.6 16.9 67.4 31.7 49.5 18.7 

India 35.6 12.6 16.8 55.3 21.6 47.5 30.9 


Note: Computed from NFHS-3 data; CED: Chronic energy deficiency 

207

Appendix Table 1.9: Malnutrition among Ever-Married Women in Major States 

(Percent) 

States 

CED Anemia CED and Anemia 

1998-99 2005-06 1998-99 2005-06 1998-99 2005-06 


Assam 27.1 36.5 69.7 69.6 20.3 26.8 

Bihar 39.1 43.2 60.4 68.3 26.2 31.0 

Gujarat 37.0 32.3 46.3 55.5 20.0 21.3 

Haryana 25.9 27.8 47.0 56.6 13.9 17.3 

Himachal Pradesh 29.7 24.3 40.5 43.3 13.2 10.2 

Karnataka 38.8 31.4 42.4 52.2 19.1 18.1 

Kerala 18.7 12.5 22.7 32.3 5.6 6.2 

Madhya Pradesh 35.2 40.2 49.3 57.7 21.8 25.6 

Maharashtra 39.7 32.6 48.5 49.1 21.5 17.9 

Orissa 48.0 40.4 63.0 62.7 32.0 28.0 

Punjab 16.9 13.5 41.4 38.2 8.4 5.8 

Rajasthan 36.1 33.3 48.5 53.8 18.6 19.1 

Tamil Nadu 29.0 23.5 56.5 53.9 18.9 14.6 

Uttar Pradesh 36.5 34.1 49.0 50.9 19.4 18.5 

West Bengal 43.7 37.6 62.7 63.8 30.2 26.3 

India 36.2 33.0 51.8 56.2 20.7 20.8 


For 2005-06, computed from NFHS-3 data. 

For 1998-99, our estimates for some states do not match with those reported in key 

findings, mainly because of the formation of new states. Hence, except for CED and 

anemia together, the sources for the other two aspects are the various reports of key 

findings [IIPS and ORC Macro 2007a]. 

208

Appendix Table 1.10: Child Mortality and Other Health Indicators 


Under 5 Mortality 

1992-93 109.3 86.5 

Rate ^ 

1998-99 94.9 63.3 

Currently Married Women (15-49) use 

1992-93 40.7 49.2 

contraceptive (%) * 

2005-06 56.3 61.4 

Children 12-23 months who have received 1992-93 42.2 71.5 

measles vaccine * 

2005-06 58.8 92.4 

Proportion of Births Attended by Skilled Health 1998-99 42.4 83.7 

Personnel * 

2005-06 48.3 93.2 

1991 437 

1998 407 79 

Maternal Mortality Rate ** 

2001-06 66.9 69.8 

Access to Safe Drinking Water in Households 1991 62.3 67.4 

(Total) # 

2001 77.9 85.6 

1991 55.5 64.3 

Access to Safe Drinking Water in Households 2001 73.2 85.3 

(Rural) # 

2005-06 40.7 90.4 

1996 3036688 80586 

Malaria Prevalence: Positive Cases & 

2006 1669333 27214 

1996 954 7 

Malaria Prevalence and Death & 

2006 1487 0 

1998 868230 19251 

Reported Cases: Tuberculosis @ 

2004 

1998 7096 285 

Deaths due to Tuberculosis @ 

2004 37639 3437 

1987 640819 17472 

Forest Cover Area in India (in Sq Kms) $ 

2003 678333 22643 

1987 19.49 13.43 

Proportion of Forest Area (%) $ 

2003 20.64 17.41 

1992-93 30.1 29.4 

% households with toilet/latrine facility* 1998-99 36.0 34.1 

Source: *NFHS-1 (1992-93), NFHS-2 (1998-99) and NFHS-3 (2005-06); # Economic Survey 2007-08 for $- 

Rajya Sabha Unstared Question No 515 dated on 4/3/2005 and Question No 3724 dated 19/5/2006. 

& Lok Sabha Unstarrd Question No 100 dated 22/11/2006, and No. 1521 and no. 231 dated 

29/08/2007. @ Lok Sabha Starred Question No.147, dated 29.11.2000; No. 3435, dated 23.12.2005 

and No. 2344, dated 18.08.2006; ^ Office of Registrar General of India; ** Rajya Sabha Unstarred 

Question No. 1532, dated 18.03.2002 & Women and Men in India 200,1Govternment of India. 

209

Appendix Table 1.11: State-wise Mortality Rate and Health Indicators 

States 

IMR 

Rural 

IMR 

Under Weight Children 

(0-3 Yrs.) 

1991 2005 

2005- 

06 

1992- 

93 

1998- 

99 

2005- 

06 

Andhra Pradesh 73 57 64 45.0 37.7 36.5 72.3 79.0 

Assam 81 68 49.2 36.0 40.4 63.2 76.7 

Bihar 69 61 63 NA 54.3 58.4 81.1 87.6 

Jharkhand 50 73 NA 54.3 59.2 82.4 77.7 

Gujarat 69 54 58 48.1 45.1 47.4 74.5 80.1 

Haryana 68 60 49 36.6 34.6 41.9 83.9 82.5 

Karnataka 77 50 47 50.6 43.9 41.1 70.6 82.7 

Kerala 16 14 14 27.0 26.9 28.8 43.9 55.7 

Madhya 

Pradesh 117 76 76 NA 53.5 60.3 71.3 82.6 

Chhattisgarh 63 75 NA 60.8 52.1 87.7 81.0 

Maharashtra 60 36 51 51.4 49.6 39.7 76.0 71.9 

Orissa 124 75 69 52.4 54.4 44.0 72.3 74.2 

Punjab 53 44 42 46.0 28.7 27.0 80.0 80.2 

Rajasthan 79 68 65 44.3 50.6 44.0 82.3 79.6 

Tamil Nadu 57 37 37 45.7 36.7 33.2 69.0 72.5 

Uttar Pradesh 97 73 75 NA 51.8 47.3 73.8 85.1 

Uttarakhand 42 50 NA 41.8 38.0 77.4 61.5 

West Bengal 71 38 50 54.8 48.7 43.5 78.3 69.4 

India 80 58 62 51.5 47.0 45.9 74.2 79.2 

Anemic 

Children (6-35 

Months Old) 

1998- 2005- 

99 06 

210

Appendix Table 1.11 (contd.): State-wise Mortality Rate and Health Indicators 

States 

1992- 

93 

Children (12-23 

Months) Fully 

Immunized 

1998- 

99 

Expectation of Life at Birth over the 

Years 

1991-95 2001-06 

2005- 

06 Male Female Male Female 

Andhra 

Pradesh 45.4 58.7 46.0 60.3 62.8 62.8 65.0 

Assam 19.4 17.0 31.6 55.7 56.1 59.0 61.0 

Bihar NA 11.6 32.8 60.1 58.0 65.7 64.8 

Jharkhand NA 8.8 34.5 NA NA NA NA 

Gujarat 50.3 53.0 45.2 60.2 62.0 63.1 64.1 

Haryana 53.5 62.7 65.3 63.0 64.0 64.6 69.3 

Karnataka 52.2 60.0 55.0 60.6 63.9 62.4 66.4 

Kerala 54.4 79.7 75.3 69.9 73.3 71.7 75.0 

Madhya 

Pradesh NA 22.6 40.3 54.7 54.6 59.2 58.0 

Chhattisgar 

h NA 21.8 48.7 NA NA NA NA 

Maharashtr 

a 64.3 78.4 58.8 63.5 65.8 66.8 69.8 

Orissa 36.1 43.7 51.8 56.6 56.2 60.1 59.7 

Punjab 61.9 72.1 60.1 66.1 68.4 69.8 72.0 

Rajasthan 21.1 17.3 26.5 58.3 59.4 62.2 62.8 

Tamil 

Nadu 65.1 88.8 80.8 62.3 64.4 67.0 69.8 

Uttar 

Pradesh NA 20.2 22.9 57.3 56.0 63.5 64.1 

Uttarakhan 

d NA 40.9 60.0 NA NA NA NA 

West 

Bengal 34.2 43.8 64.3 61.5 62.8 66.1 69.3 

India 35.5 42.0 43.5 59.7 60.9 63.9 66.9 

Source: Office of the registrar General of India for IMR, and Life Expectancy and NFHS-1 (1992-93), NFHS-2 

(1998-99) and NFHS-3 (2005-06) for others. 

211

States 

Appendix Table 1.12: Maternal Mortality and Women Health Indicators 

Birth Assisted by 

Doctor/health Persons 

1992- 

93 

1998- 

99 

2005- 

06 

Andhra Pradesh 48.9 65.2 74.2 34.3 49.8 68.6 49.8 62.0 

Assam 18.0 21.4 31.2 11.7 17.6 22.7 69.7 69.0 

Bihar NA 24.8 30.9 NA 14.8 22.0 60.4 68.3 

Jharkhand NA 17.5 28.7 NA 13.9 19.2 72.9 70.4 

Gujarat 43.4 53.5 64.7 36.8 46.3 54.6 46.3 55.5 

Haryana 31.5 42.1 54.2 17.5 22.4 39.4 47.0 56.5 

Karnataka 46.6 59.1 71.3 38.4 51.1 66.9 42.4 50.3 

Kerala 90.2 94.1 99.7 88.9 92.9 99.5 22.7 32.3 

Madhya 

Pradesh NA 28.9 37.1 NA 22.0 29.7 49.3 57.6 

Chhattisgarh NA 32.3 44.3 NA 13.8 15.7 68.7 57.6 

Maharashtra 53.1 59.4 70.7 44.5 52.6 66.1 48.5 49.0 

Orissa 19.0 33.4 46.4 14.1 22.6 38.7 63.0 62.8 

Punjab 47.3 62.6 68.6 24.8 37.5 52.5 41.4 38.4 

Rajasthan 19.3 35.8 43.2 12.0 21.5 32.2 48.5 53.1 

Tamil Nadu 69.3 83.7 93.2 64.3 79.3 90.4 56.5 53.3 

Uttar Pradesh NA 21.8 29.2 NA 15.2 22.0 49.0 50.8 

Uttarakhand NA 34.6 41.5 NA 20.6 36.0 45.6 47.6 

West Bengal 33.9 44.2 45.7 32.0 40.1 43.1 62.7 63.8 

India 33.0 42.4 48.3 26.1 33.6 40.7 51.8 56.2 

Institutional Births Women (15- 

49) who are 

Anemic 

1992- 1998- 2005- 1998- 2005- 

93 99 06 99 06 

212

Appendix Table1.12 (contd.): Maternal Mortality and Women Health Indicators 

States 

Women know 

about AIDS 

Married 

Women 

taking 

House 

Decision 

Women with 

below Normal 

Body Mass 

Index 

Maternal 

Mortality 

1998-99 2005-06 2005-06 1998-99 2005-06 1998 

Andhra Pradesh 55.3 73.6 55.7 37.4 30.8 159 

Assam 33.7 53.2 70.1 27.1 36.5 409 

Bihar 10.5 35.2 46.3 39.1 43.0 452 

Jharkhand 15.4 28.9 59.0 41.1 42.6 

Gujarat 29.8 49.3 56.7 37.0 32.3 28 

Haryana 44.3 60.0 56.3 25.9 27.8 103 

Karnataka 58.1 66.4 47.4 38.8 31.4 195 

Kerala 86.9 95.0 62.5 18.7 12.5 198 

Madhya Pradesh 23.7 45.3 46.7 35.2 40.1 498 

Chhattisgarh 19.6 40.7 51.3 48.1 41.0 

Maharashtra 61.1 79.2 63.8 39.7 32.6 135 

Orissa 39.0 62.1 55.3 48.0 40.5 367 

Punjab 54.6 69.7 52.3 16.9 13.5 199 

Rajasthan 20.8 33.8 40.2 36.1 33.6 670 

Tamil Nadu 87.3 94.0 69.2 29.0 23.5 79 

Uttar Pradesh 19.2 40.0 48.2 36.5 34.1 707 

Uttarakhand 35.6 64.3 47.9 32.4 25.7 

West Bengal 26.4 50.2 38.1 43.7 37.7 266 

India 40.3 57.0 52.5 36.2 33.0 407 

Source: NFHS-1 (1992-93), NFHS-2 (1998-99) and NFHS-3 (2005-06); Rajya Sabha Unstarred Question No. 

1532 dated 18/3/2002. 

213

Appendix Table 2.1: Per Capita Consumption Expenditure and their Gini 

Coefficients 

States Mean Per Capita Expenditure Gini Coefficients 



Assam 404.7 1117.11 0.22 0.31 

Bihar 403.9 776.13 0.23 0.34 

Gujarat 592.36 850.49 0.24 0.3 

Haryana 656.83 1043.85 0.24 0.28 

Karnataka 583.19 786.03 0.28 0.34 

Kerala 711.91 913.45 0.32 0.34 

Madhya Pradesh 462.63 675.98 0.27 0.33 

Maharashtra 533.61 808.11 0.27 0.35 

Orissa 415 676.47 0.26 0.33 

Punjab 725.22 1104.52 0.27 0.29 

Rajasthan 546.92 788.83 0.23 0.3 

Tamil Nadu 613.36 951.57 0.31 0.4 

Uttar Pradesh 485.06 750.79 0.26 0.33 

West Bengal 533.37 1007.62 0.29 0.36 


Appendix Table 2.2: Decomposition of the Head Count Ratio in 1999-00: Rural 

States 

Head 

Count 

Ratio 

(Percent) 


with all India 

Ration (Percentage 

Points) 

214 

Mean 

Component 

(Percentage 

Points) 

Distribution 

Component 

(Percentage 

Points) 


Assam 37.46 -12.63 -20.78 8.15 

Bihar 40.60 -15.80 -22.38 6.59 

Gujarat 12.40 12.43 7.72 4.71 

Haryana 8.40 16.43 12.73 3.70 

Karnataka 16.38 8.44 7.50 0.95 

Kerala 12.88 11.94 17.22 -5.28 

Madhya Pradesh 32.96 -8.14 -9.28 1.14 

Maharashtra 21.96 2.86 1.83 1.03 

Orissa 40.96 -16.13 -18.42 2.29 

Punjab 7.91 16.92 16.50 0.41 

Rajasthan 12.98 11.85 3.31 8.53 

Tamil Nadu 18.98 5.84 10.15 -4.30 

Uttar Pradesh 27.43 -2.61 -5.39 2.78 

West Bengal 23.95 0.87 1.81 -0.94 

All India 24.83 

Source: Dhongde (2003).

Appendix Table 2.3: Decomposition of the Head Count Ratio in 1999-00: Urban 

States 

Head Count 

Ratio 

(Percent) 

Total 

Difference with 

all India Ration 

(Percentage 

Points) 

Mean 

Component 

(Percentage 

Points) 

Distribution 

Component 

(Percentage 

Points) 

Andhra Pradesh 26.35 -1.37 -1.95 0.58 

Assam 9.54 15.44 10.38 5.06 

Bihar 29.42 -4.43 -4.15 -0.29 

Gujarat 17.82 7.16 0.54 6.63 

Haryana 8.61 16.38 7.31 9.06 

Karnataka 27.20 -2.22 -3.15 0.93 

Kerala 20.25 4.74 3.73 1.00 

Madhya Pradesh 36.47 -11.49 -13.23 1.74 

Maharashtra 28.68 -3.69 -1.83 -1.86 

Orissa 36.71 -11.73 -11.00 -0.72 

Punjab 6.90 18.08 9.90 8.18 

Rajasthan 21.39 3.59 -3.09 6.68 

Tamil Nadu 23.81 1.17 2.92 -1.75 

Uttar Pradesh 29.88 -4.90 -5.98 1.08 

West Bengal 16.49 8.49 8.45 0.04 

All India 24.98 


Appendix Table 3.1: Implementation of VAT at the State Level 

States No. of States Date of Implementation 

Haryana 1 April 1, 2003 

Andhra Pradesh, West Bengal, Kerala, 17 April 1, 2005 

Karnataka, Orissa, NCT Delhi, Tripura, 

Bihar, Arunachal Pradesh, Sikkim, Punjab, 

Goa, Mizoram, Nagaland, Jammu & Kashmir, 

Maharashtra, Himachal Pradesh 

Assam, Meghalaya 2 May 1, 2005 

Manipur 1 July, 2005 

Uttaranchal 1 October 1, 2005 

Jharkhand 1 January 1, 2006 

Rajasthan, Gujarat, Chhattisgarh, Madhya 4 April 1, 2006 

Pradesh 

Tamil Nadu 1 January 1, 2007 

Uttar Pradesh 1 January1, 2008 

Source: RBI (2006) State Finances, 2005-06 and Recent Budget Announcements. 

215

Appendix Table 3.2: Per Capita Expenditure on Poverty Alleviation in Tamil Nadu 

(Rupees) 

Expenditur 

e Head 

1 Total 

Expenditur 

e 

2 Human 

Developme 

nt 

Expenditur 

e 

3 Poverty 

Alleviation* 

3. In Social 

1 Services 

Welfare of 

SC, ST & 

OBCs 

Labour and 

Employment 

Social 

Security & 

Welfare 

Rural 

Housing 

Grants to 

NGOs, 

Destitute etc 

3. Rural 

2 Developme 

nt 

Special 

Programmes 

for Rural 

Dev. 

Rural 

Employment 

Land 

Reforms 

Other Rural 

Development 

Progms. 

534.72 731.27 1532.7 

3 

216 

1444.1 

5 

1512.1 

6 

1803.9 

4 

2034.0 

3 

1990- 

91 

1141.9 

1 

1993- 

94 

1692.4 

6 

2000- 

01 

3819.6 

9 

2001- 

02 

3806.3 

4 

2002- 

03 

4423.0 

2 

2003- 

04 

4675.9 

6 

2004- 

05 

5190.9 

5 

2005- 

06 

5576.6 

1 

2124.8 

8 

153.52 205.88 414.30 350.42 374.72 482.15 695.02 528.88 

60.59 80.91 212.97 201.99 205.40 258.59 526.30 349.84 

25.44 35.12 83.87 77.89 82.70 97.68 94.91 134.44 

8.10 9.69 17.32 16.72 18.10 22.71 15.91 19.82 

25.50 34.12 107.00 109.92 98.99 131.04 407.09 185.01 

0.82 0.90 0.97 0.88 5.33 6.84 8.38 9.19 

0.72 1.09 3.80 -3.42 0.29 0.32 0.00 1.39 

92.93 124.97 201.34 148.42 169.32 223.56 168.72 179.04 

6.06 11.19 6.27 4.52 4.43 5.42 5.88 5.79 

31.75 44.47 24.23 28.94 27.85 34.10 29.94 24.79 

0.12 0.04 0.82 0.37 0.11 0.55 0.64 0.93 

21.14 17.00 107.65 48.40 65.81 103.13 49.86 60.61 

Hill Areas 3.54 4.38 4.59 4.37 4.85 4.56 2.53 1.43 

Centrally 

Sponsored 

Schemes 

30.33 47.88 57.78 61.81 66.29 75.80 79.87 85.50 

4 Other 

Social 

32.50 55.61 63.00 74.61 146.43 265.69 189.61 293.96 

Services 

Housing 9.04 8.77 12.05 11.46 19.76 25.18 5.53 13.01 

Urban 

16.20 23.51 41.39 36.85 59.94 168.30 20.20 30.08 

Development 

Information 1.48 2.08 3.53 2.10 3.38 4.79 3.43 4.26

and Publicity 

Relief from 

Natural 

Calamities 

Secretariat – 

Social 

Services 

4.85 19.46 1.73 20.09 59.58 63.95 156.30 242.49 

0.93 1.79 4.28 4.10 3.77 3.47 4.16 4.13 

Source: (basic data): Sen et. al (2008) and Finance Accounts, Comptroller and Auditor General, and Annual 

Reports, Ministry Development, Government of India. 

Note:* Poverty alleviation includes social welfare, rural housing, transfer payments under other social services 

and rural development. 

Appendix Table 4.1: Index of Deficiency: HDI Components 

Life Expectancy at Birth 

(LEB ) (2006) 

Literacy Rate (LR) 

(2004-05) 

Gross Enrolment Ratio 

(GER) 2006 

Real Per Capita GDDP 

(2002-03) PPP 

Theni 21.29 Dharmapuri 39.31 Thiruvannamalai 18.96 Villupuram 109.89 

Dindigul 21.15 Krishnagiri 39.31 Villupuram 18.77 Thiruvannamalai 102.94 

Virudhunagar 21.15 Villupuram 31.66 The Nilgiris 17.87 Dharmapuri 96.70 

Ramanathapuram 20.88 Perambalur 31.06 Krishnagiri 17.54 Krishnagiri 96.70 

Namakkal 20.60 Erode 30.76 Vellore 15.93 Thiruvarur 93.83 

Dharmapuri 20.60 Salem 30.48 Dharmapuri 15.13 Pudukkottai 91.84 

Sivaganai 20.60 Namakkal 27.84 Thanjavur 13.68 Thanjavur 90.47 

Vellore 18.41 Thiruvannamalai 27.07 Ramanathapuram 13.44 Caddalore 89.75 

Thirunelveli 18.27 Tiruchirapalli 26.36 Thoothukudi 12.67 Nagapatinam 86.84 

Thiruvannamalai 18.13 Karur 26.36 Thiruvarur 12.64 Sivaganai 85.65 

Perambalur 17.99 Dindigul 24.89 Perambalur 12.59 Ramanathapuram 78.59 

Caddalore 17.86 Pudukkottai 22.40 Chennai 12.34 Vellore 78.56 

Thanjavur 17.72 Caddalore 22.13 Pudukkottai 12.05 Perambalur 77.50 

Krishnagiri 17.72 Theni 21.92 Thiruvallur 11.61 Kanniyakumari 77.05 

Pudukkottai 17.58 Sivaganai 21.03 Erode 11.19 Tiruchirapalli 76.65 

Villupuram 17.31 Ramanathapuram 20.50 Kanchipuram 10.74 Karur 76.65 

Kanniyakumari 16.76 Vellore 20.48 Sivaganai 10.66 Salem 73.22 

Thiruvarur 16.62 Tamil Nadu 19.93 Dindigul 10.46 The Nilgiris 67.74 

Tamil Nadu 16.48 Virudhunagar 18.90 Nagapatinam 10.28 Dindigul 65.32 

Erode 16.07 Thanjavur 16.38 Tiruchirapalli 9.76 Tamil Nadu 63.45 

The Nilgiris 16.07 Thiruvallur 15.75 Karur 9.76 Thirunelveli 62.85 

Madurai 15.66 Nagapatinam 15.27 Salem 9.01 Namakkal 60.76 

Coimbatore 15.11 Thiruvarur 15.26 Caddalore 8.91 Madurai 60.34 

Salem 14.84 Coimbatore 15.20 Virudhunagar 8.85 Erode 53.75 

Nagapatinam 13.87 Thirunelveli 15.16 Tamil Nadu 8.44 Thoothukudi 46.64 

Thiruvallur 12.77 Kanchipuram 14.29 Kanniyakumari 6.77 Theni 44.75 

Kanchipuram 11.40 Madurai 12.87 Thirunelveli 5.79 Thiruvallur 39.21 

Tiruchirapalli 11.26 Chennai 10.85 Theni 4.85 Kanchipuram 34.80 

Karur 11.26 The Nilgiris 9.08 Madurai 2.87 Virudhunagar 24.00 

Thoothukudi 9.07 Thoothukudi 8.38 Coimbatore 2.31 Coimbatore 22.47 

Chennai 0.00 Kanniyakumari 0.00 Namakkal 0.00 Chennai 0.00 

Source: Eleventh Five Year Plan: Tamil Nadu, State Planning Commission, 2008. 

Notes: LEB- computed by SPC using the data of VES 2006, LR – computed by SPC using NSS 61 st round and 

Census 2001 data. GER – computed by SPC using the data on school enrolment 2006-07 of school 

education department. Projected population 2006 by DOES. Age wise population as proportion of 2001 

census. Real PCGDDP – computed by SPC using the data on district wise per capita income 2002-03 and 

PPP$ value from Global HDR 2004. 

217

Life Expectancy 

at Birth (LEB) 

Appendix Table 4.2: Index of Gender Deficiency: District-wise 

Relative to Tamil Nadu Average 

Index Literacy Index Gross Enrolment 

Ratio (GER) 

Index 

Per capita 

Income 

Index 

Perambalur 88.82 Perambalur 89.05 Dharmapuri 95.55 Thoothukudi 94.01 

Thanjavur 94.96 Krishnagiri 89.17 Theni 95.57 Thirunelveli 94.76 

Pudukkottai 96.02 Villupuram 89.18 Ramanathapuram 96.11 Sivagangai 95.14 

Dharmapuri 96.53 Thiruvannamalai 89.66 Villupuram 96.90 Ramanathapuram 95.33 

Erode 97.56 Karur 90.84 Thoothukudi 97.28 Thanjavur 96.72 

Kanniyakumari 97.86 Dharmapuri 90.86 Virudhunagar 97.43 Pudukkottai 97.26 

Karur 98.10 Namakkal 93.08 Nagapatinam 97.49 Nagapatinam 97.33 

Thirunelveli 98.34 Pudukkottai 93.26 Thiruvannamalai 98.00 The Nilgiris 97.34 

Nagapatinam 98.50 Erode 93.40 Sivagangai 98.15 Kanniyakumari 97.39 

Namakkal 98.90 Cuddallore 93.79 Pudukkottai 98.34 Thiruvarur 97.41 

Thiruvarur 99.48 Dindigul 94.00 Thirunelveli 98.40 Virudhunagar 97.56 

Cuddallore 99.56 Salem 94.10 Namakkal 98.54 Karur 97.77 

Kancheepuram 99.79 Sivagangai 94.55 Karur 98.96 Perambalur 98.20 

Theni 99.80 Theni 94.81 Vellore 99.06 Tiruchirapalli 98.63 

Thiruvannamalai 100.11 Virudhunagar 96.55 Perambalur 99.37 Vellore 99.02 

Tiruchirapalli 100.15 Ramanathapuram 97.66 Dindigul 99.52 Thiruvannamalai 99.25 

Chennai 100.48 Vellore 97.85 Erode 99.85 Dindigul 100.11 

Dindigul 100.78 Thanjavur 99.84 The Nilgiris 100.01 Cuddallore 100.17 

Ramanathapuram 100.78 Thirunelveli 101.72 Madurai 100.49 Theni 100.93 

Villupuram 101.02 Thiruvarur 101.91 Cuddallore 100.68 Madurai 100.95 

Thoothukudi 101.39 Nagapatinam 101.91 Kanniyakumari 100.69 Kancheepuram 101.31 

Virudhunagar 101.63 Madurai 102.20 Krishnagiri 101.01 Erode 101.61 

Coimbatore 101.80 Thiruvallur 102.62 Tiruchirapalli 101.26 Thiruvallur 101.65 

Thiruvallur 101.86 Tiruchirapalli 104.08 Thiruvarur 101.49 Namakkal 102.19 

Vellore 102.53 The Nilgiris 104.38 Thiruvallur 101.96 Coimbatore 102.52 

Salem 104.26 Kancheepuram 105.43 Thanjavur 102.22 Chennai 103.17 

Krishnagiri 104.30 Coimbatore 106.17 Coimbatore 102.43 Krishnagiri 105.09 

Sivagangai 104.66 Thoothukudi 108.65 Salem 102.98 Dharmapuri 105.09 

Madurai 104.76 Chennai 113.27 Kancheepuram 104.81 Salem 106.27 

The Nilgiris 106.15 Kanniyakumari 119.73 Chennai 106.10 Villupuram 308.12 

Tamil Nadu 100.00 100.00 100.00 100.00 


218

Appendix Table 4.3: Demography Related Disabilities 

Districts % of Population 0-6 Districts % of Birth order 3 

and Above 

% Population Index Value 

% of Birth Index 

0-6 

Order 3+ Value 

Dharmapuri 12.9 0.609 Nagapattinam 36.6 0.599 

Ariyalur 12.3 0.644 Villupuram 35.9 0.611 

Pudukkottai 12.1 0.659 Ariyalur 35.8 0.612 

Ramanathapuram 12.0 0.663 Thoothukudi 35.3 0.621 

Villupuram 12.0 0.661 Vellore 35.3 0.621 

Cuddallore 11.9 0.669 Pudukkottai 34.8 0.629 

Perambalur 11.7 0.679 Ramanathapuram 34.5 0.633 

Vellore 11.7 0.677 Dharmapuri 34.4 0.635 

Nagapattinam 11.6 0.684 Thiruvannamalai 34.3 0.637 

Thiruvannamalai 11.5 0.693 Cuddallore 33.3 0.653 

Thiruvallur 11.4 0.697 Perambalur 33.1 0.656 

Virudhunagar 11.4 0.699 Thiruvarur 32.7 0.664 

Thiruvarur 11.3 0.702 Thirunelveli 31.6 0.682 

Kancheepuram 11.1 0.716 Tiruchirapalli 31.2 0.688 

Thanjavur 11.1 0.712 Thanjavur 30.8 0.695 

Thoothukudi 11.1 0.715 Sivagangai 30.3 0.702 

Tiruchirapalli 11.1 0.747 Virudhunagar 29.6 0.714 

Thirunelveli 11.1 0.716 Salem 28.8 0.727 

Madurai 10.9 0.726 Madurai 28.3 0.737 

Salem 10.9 0.728 Dindigul 27.6 0.748 

Theni 10.9 0.728 Kancheepuram 27.2 0.754 

Sivagangai 10.8 0.731 Theni 27.1 0.755 

Dindigul 10.7 0.738 Thiruvallur 25.6 0.780 

The Nilgiris 10.6 0.743 Karur 25.0 0.791 

Karur 10.4 0.753 Namakkal 23.0 0.823 

Coimbatore 10.3 0.763 The Nilgiris 22.3 0.834 

Kanniyakumari 10.2 0.764 Chennai 21.3 0.852 

Namakkal 9.7 0.797 Kanniyakumari 20.6 0.862 

Erode 9.1 0.828 Coimbatore 19.0 0.890 

Chennai 8.9 0.843 Erode 18.8 0.893 

Source: International Institute of Population Sciences (2005). 

Note: Districts are based on 2001 Census. 

219

Appendix Table 4.4: Demography Related Gender Disabilities 

% of Birth Below 

Age 20 

% of Under 5 

Mortality Rate 

Districts % Births 

below 20 

Index Value Districts Under 5 

Mortalit 

Index 

Value 

y 

Namakkal NA NA Theni 105 0.71936 

Thiruvannamalai NA NA Virudhunagar 101 0.73757 

Dharmapuri 12.1 0.42790 Thoothukudi 99 0.74668 

Salem 10.4 0.51266 Madurai 98 0.75124 

Theni 9.9 0.53606 Dindigul 95 0.76490 

Perambalur 8.1 0.63095 Villupuram 94 0.76944 

Vellore 7.7 0.65105 Coimbatore 93 0.77401 

Villupuram 7.1 0.67799 Namakkal 93 0.77401 

Cuddallore 6.5 0.71325 Thiruvannamalai 91 0.78311 

Ariyalur 6.2 0.72355 Vellore 91 0.78311 

Dindigul 6.1 0.73145 Perambalur 90 0.78767 

Thiruvallur 5.9 0.73901 Sivagangai 89 0.79222 

Madurai 5.8 0.74878 Chennai 85 0.81044 

Erode 5.7 0.74946 Ariyalur 84 0.81499 

Karur 5.7 0.75304 The Nilgiris 84 0.81499 

The Nilgiris 5.7 0.75146 Tiruchirapalli 84 0.81499 

Virudhunagar 5.2 0.77441 Thirunelveli 83 0.81954 

Ramanathapura 

m 4.5 0.81032 Nagapattinam 82 0.82410 

Tiruchirapalli 4.5 0.81465 Salem 82 0.82410 

Coimbatore 4.4 0.81910 Dharmapuri 81 0.82865 

Kancheepuram 4.4 0.81593 Karur 78 0.84231 

Chennai 4.1 0.83043 Cuddallore 76 0.85142 

Sivagangai 3.8 0.84870 

Ramanathapura 

m 75 0.85597 

Nagapattinam 3.6 0.85889 Kancheepuram 74 0.86503 

Thanjavur 3.6 0.85793 Thiruvallur 74 0.86503 

Thiruvarur 3.5 0.86506 Erode 73 0.86508 

Pudukkottai 3.1 0.88172 Pudukkottai 71 0.87419 

Thirunelveli 2.8 0.90109 Thanjavur 70 0.87874 

Thoothukudi 2.6 0.90819 Thiruvarur 69 0.88330 

Kanniyakumari 1.2 0.98177 Kanniyakumari 59 0.92883 


220

Appendix Table 4.5: Health Facilities for Women in Tamil Nadu Districts 

Districts 

Women 

Receiving 3 or 

More ANC Visits 

During 

Pregnancy 

% 

ANCs 

3+ 

Index 

Value 


At least 2 TT 

Injections 

At least 2 

TT 

Injections 

Index 

Value 

Complete 

Immunization 

Coverage 

% Full 

Immunization 

Index Value 

Dharmapuri 95.8 0.95515 75.2 0.73136 97.0 0.98146 


Ariyalur 93.3 0.92904 84.2 0.83101 97.2 0.98346 

Villupuram 89.6 0.89046 89.2 0.88719 87.0 0.88094 


Perambalur 91.4 0.90879 95.1 0.95349 93.6 0.93739 

Pudukkottai 98.3 0.98182 58.9 0.54871 96.5 0.97709 

Salem 96.9 0.96701 96.8 0.97182 88.1 0.89158 

Vellore 96.5 0.96278 77.8 0.75952 92.4 0.93507 

Cuddallore 95.4 0.95092 92.9 0.92839 87.1 0.88184 

Dindigul 92.1 0.91645 86.6 0.85771 95.6 0.96738 

Nagapattinam 94.5 0.94197 95.5 0.95778 89.0 0.90067 

Sivagangai 95.7 0.95497 93.9 0.94011 91.7 0.92826 

Virudhunagar 95.0 0.94748 90.7 0.90423 94.7 0.95854 

Theni 97.5 0.97373 92.3 0.92235 95.0 0.96121 

Thoothukudi 96.8 0.96606 86.5 0.85670 86.6 0.87711 

Namakkal 97.7 0.97524 95.6 0.95837 95.6 0.96751 

Karur 95.5 0.95294 97.8 0.98329 88.2 0.89283 

Thiruvarur 95.4 0.95126 88.5 0.87948 88.1 0.89179 

Tiruchirapalli 95.4 0.95119 87.1 0.86355 82.5 0.83466 

Thirunelveli 94.6 0.94332 96.2 0.96569 83.7 0.84694 

Thanjavur 98.0 0.97908 97.4 0.97868 87.1 0.88199 

Thiruvallur 94.3 0.93984 80.4 0.78906 94.3 0.95408 

Madurai 90.6 0.90100 95.6 0.95898 85.4 0.86414 

The Nilgiris 97.5 0.97364 92.5 0.92458 92.0 0.93120 

Erode 99.7 0.99712 99.3 1.00000 97.6 0.98817 

Kancheepuram 99.3 0.99254 96.4 0.96720 90.5 0.91568 

Coimbatore 100.0 1.00000 76.4 0.74433 93.9 0.95012 

Kanniyakumari 98.1 0.97952 87.9 0.87290 90.3 0.91427 

Chennai 97.4 0.97301 81.8 0.80434 96.2 0.97423 



221

Appendix Table 4.6: Health Facilities for Women in Tamil Nadu Districts (contd.) 

Immunization Drop 

Out 

Contraceptive 

Prevalence Rate 

Composite 

Index 

Districts 

% Index Value CPR Index Value Index Value 

Immunization 

Drop out 

Dharmapuri 2.4 0.98689 53.0 0.56081 0.67378 

Ramanathapuram 11.4 0.89169 49.4 0.51884 0.68112 

Ariyalur 2.1 0.99022 47.3 0.49439 0.69529 

Villupuram 10.9 0.89696 55.1 0.58479 0.69655 

Thiruvannamalai 1.2 1.00000 58.1 0.62018 0.70323 

Perambalur 6.5 0.94371 48.1 0.50340 0.70619 

Pudukkottai 3.5 0.97600 53.4 0.56506 0.70919 

Salem 11.9 0.88643 54.6 0.57872 0.72383 

Vellore 7.6 0.93199 55.7 0.59182 0.72538 

Cuddallore 12.9 0.87623 56.3 0.59882 0.73888 

Dindigul 4.4 0.96584 58.3 0.62279 0.74081 

Nagapattinam 11.0 0.89596 54.5 0.57810 0.74328 

Sivagangai 8.3 0.92486 59.6 0.63764 0.74664 

Virudhunagar 4.1 0.96933 50.0 0.52538 0.74846 

Theni 5.0 0.95936 65.7 0.72833 0.75040 

Thoothukudi 12.3 0.88253 44.0 0.45522 0.75111 

Namakkal 4.4 0.96590 54.9 0.58259 0.75202 

Karur 11.8 0.88775 52.8 0.55816 0.75253 

Thiruvarur 11.9 0.88666 55.4 0.58896 0.75270 

Tiruchirapalli 15.5 0.84824 53.3 0.56424 0.75728 

Thirunelveli 15.2 0.85204 55.5 0.58946 0.76828 

Thanjavur 12.9 0.87639 57.5 0.61306 0.77334 

Thiruvallur 5.7 0.95190 63.9 0.68785 0.77749 

Madurai 13.6 0.86827 66.4 0.71708 0.77851 

The Nilgiris 5.8 0.95112 66.0 0.71238 0.78501 

Erode 2.4 0.98761 62.7 0.67341 0.79705 

Kancheepuram 9.5 0.91168 62.7 0.67383 0.79856 

Coimbatore 6.1 0.94776 58.2 0.62148 0.79946 

Kanniyakumari 5.3 0.95665 54.0 0.57242 0.81977 

Chennai 3.8 0.97301 71.3 0.77400 0.86750 



222

Sl. 

No 

Appendix Table 4.7: Efficiency Scores of District Public Health 

Systems in TN: 2006-07 

Name of the Districts 

Technical 

Efficiency 

(percent) 

Scale 

Efficiency 

(percent) 

Returns to 

Scale 

1 Coimbatore 100.00 100.00 CRS 

2 Cuddallore 100.00 100.00 CRS 

3 Dharmapuri 100.00 100.00 CRS 

4 Dindigul 97.94 88.36 DRS 

5 Erode 100.00 92.89 DRS 

6 Kancheepuram 100.00 100.00 CRS 

7 Kanniyakumari 77.27 91.20 IRS 

8 Karur 100.00 100.00 CRS 

9 Krishnagiri 100.00 97.20 IRS 

10 Madurai 100.00 100.00 CRS 

11 Nagapattinam 81.32 93.79 IRS 

12 Namakkal 85.22 95.00 DRS 

13 Perambalur 100.00 100.00 CRS 

14 Pudukkottai 77.46 98.57 IRS 

15 Ramanathapuram 65.52 99.01 IRS 

16 Salem 100.00 99.15 DRS 

17 Sivagangai 72.89 96.05 IRS 

18 Thanjavur 100.00 100.00 CRS 

19 The Nilgiris 85.19 41.34 IRS 

20 Theni 100.00 100.00 CRS 

21 Thiruvallur 100.00 100.00 CRS 

22 Thiruvannamalai 100.00 100.00 CRS 

23 Thiruvarur 97.32 97.60 IRS 

24 Thoothukudi 89.74 97.92 IRS 

25 Thirunelveli 80.65 97.41 DRS 

26 Tiruchirapalli (Trichy) 90.87 99.68 IRS 

27 Vellore 100.00 95.71 DRS 

28 Villupuram 100.00 100.00 CRS 

29 Virudhunagar 83.81 99.71 DRS 

Source: Dash et. al (2008). 

223

Districts 

Appendix Table 4.8: Index of Districts with Safe Drinking Water 

and Electricity Connection 

% Households using 

Safe Drinking Water 

% Households 

using Safe 

Drinking 

Water 

Index 

Value 

Districts 

% Households 

Connected with 

Electricity 

% 

Households 

Electrified 

Index 

Value 

Ramanathapuram 52.2 0.500 Thiruvarur 64.8 0.639 

Kanniyakumari 56.2 0.541 Nagapattinam 64.9 0.640 

Thiruvallur 70.4 0.691 Pudukkottai 65.0 0.641 

The Nilgiris 74.4 0.733 Ariyalur 65.7 0.649 

Sivagangai 75.6 0.746 Ramanathapuram 66.1 0.652 

Pudukkottai 78.7 0.778 Dindigul 69.1 0.683 

Dharmapuri 79.7 0.712 Dharmapuri 71.5 0.708 

Namakkal 80.6 0.798 Sivagangai 71.8 0.711 

Kancheepuram 81.2 0.804 Thanjavur 71.9 0.712 

Salem 82.1 0.813 The Nilgiris 73.0 0.723 

Erode 84.5 0.839 Theni 74.4 0.738 

Chennai 85.6 0.851 Karur 74.5 0.740 

Thoothukudi 86.5 0.860 Thiruvannamalai 75.7 0.751 

Perambalur 86.6 0.862 Villupuram 76.6 0.761 

Vellore 86.9 0.864 Cuddallore 76.8 0.762 

Ariyalur 87.8 0.874 Tiruchirapalli 77.2 0.767 

Thiruvannamalai 87.9 0.875 Kanniyakumari 77.3 0.768 

Villupuram 88.4 0.880 Erode 77.3 0.768 

Dindigul 90.2 0.899 Perambalur 78.4 0.779 

Nagapattinam 91.6 0.914 Vellore 78.6 0.781 

Thirunelveli 91.6 0.913 Salem 79.4 0.790 

Karur 92.1 0.919 Namakkal 79.7 0.793 

Virudhunagar 92.1 0.919 Madurai 79.9 0.795 

Coimbatore 92.2 0.920 Virudhunagar 80.3 0.799 

Tiruchirapalli 93.3 0.931 Thoothukudi 81.6 0.813 

Madurai 93.9 0.937 Thirunelveli 83.6 0.833 

Cuddallore 94.4 0.943 Coimbatore 84.4 0.842 

Thanjavur 94.6 0.945 Kancheepuram 85.7 0.855 

Theni 96.0 0.959 Thiruvallur 87.2 0.871 

Thiruvarur 96.4 0.964 Chennai 94.0 0.941 



224

Appendix Table 4.9: Employment under NREGA and Share of BPL Population 

Districts 

Cumulative Person 

Days generate (in 

Lakh) 

Share of 

Cumulative No of 

Days in Total Days 

Share of BPL 

Population in 

Total BPL 

Population 

Coimbatore 0.75 0.18 5.04 

Cuddallore 49.98 11.92 3.78 

Dharmapuri 2.21 0.53 3.80 

Dindigul 27.71 6.61 2.61 

Erode 2.39 0.57 3.81 

Kanchipuram 5.65 1.35 4.03 

Kanniyakumari 0.55 0.13 0.91 

Karur 8.29 1.98 1.94 

Krishnagiri 1.21 0.29 3.52 

Madurai 5.63 1.34 3.53 

Nagapattinam 44.44 10.60 2.38 

Namakkal 1.59 0.38 2.40 

Perambalur 6.02 1.44 3.24 

Pudukkottai 6.36 1.52 4.09 

Ramanathapuram 7.18 1.71 2.80 

Salem 2.69 0.64 4.87 

Sivagangai 25.08 5.98 2.84 

Thanjavur 18.93 4.52 4.24 

The Nilgiris 0.28 0.07 0.72 

Theni 1.01 0.24 1.22 

Tiruchirapalli 3.13 0.75 3.81 

Thirunelveli 17.95 4.28 3.33 

Thiruvallur 8.07 1.93 4.07 

Thiruvannamalai 34.81 8.30 5.23 

Thiruvarur 29.15 6.95 2.55 

Tuticorin 14.40 3.43 2.76 

Vellore 6.91 1.65 7.22 

Villupuram 83.15 19.83 5.91 

Virudhunagar 3.70 0.88 3.34 

Total 419.22 100.00 


Correlation between Share of BPL Population in District in All BPL Population 

in the State (Variable 1) and Share in Cumulative Number of Days under 

NREGA (Variable 2) 

Variable 1 Variable 2 

Variable 1 1 

Variable 2 0.26 1 

225

Appendix 4.10: Thiruannamalai: Index of Relative Deficiency in Literacy 

Urban Areas Index Rural Areas Index 

Vembakkam 18.39 Jawadhu Hills 50.72 

Cheyyar 1.69 Thandrampet 20.32 

Pernamallur 9.78 Pudupalayam 17.97 

Vanadavasi 0.00 Chengam 17.70 

Thellar 9.14 Kalasapakkam 12.78 

Arni 4.04 Thurinjapuram 9.91 

West Arni 5.36 Annakavur 6.39 

Polur 6.93 Pernamallur 6.25 

Chetpet 6.51 Thellar 6.16 

Kilpennathur 11.20 Vembakkam 4.69 

Tiruvannamalai 1.28 Chetpet 8.06 

Pudupalayam 18.93 Kilpennathur 6.67 

Chengam 13.04 Polur 4.98 

Vanadavasi 5.96 

Cheyyar 7.15 

West Arni 1.59 

Tiruvannamalai 7.70 

Arni 0.00 

Source (Basic Data): Census of India. 

226

Appendix Table 5.1: Major and Medium Irrigation Projects in Tamil Nadu: 

Selected List 

Sl. 

Major Irrigation 

Sl. 

Medium Irrigation 

No. 

No. 

1 Cauvery Delta System 29 Amaravathi Reservoir project 

2 Periyar System 30 Nandiar system 

3 Parambikulam Aliyar projects 31 Thirukoilur system 

4 Chittar-Pattanamkal System 32 Manimutharu system 

5 Modernization of Vaigai channel 33 Gomukhi Nadhi Project 

6 Noyyal Nathipalayam 34 Vidur Reservoir project 

Medium Irrigation 35 Panchapatti Reserviour 

1 Thadapplai channels 36 Ponnaniar scheme 

2 Lkalibngarayan channels 37 Thandarai Anicut 

3 shatiatope Anicut 38 Gatana project system 

4 Melmathur Anicut 39 Ramanadhi project 

5 Vridhachalam Anivut 40 Karuppa Nathi Project 

6 Lower Coleroon Anicut 41 Grand Anicut Canal System 

7 Srivaikundam Anicut 42 Neyyar Scheme 

8 Kodyar project 43 Palar Porandalar System 

9 Krishnagiri Reservoir project 44 Marudha Nathi Scheme 

10 Palar Anicut 45 Chinnar Reservoir project 

11 Pilandurai Anicut 46 Viraganaur Regulator 

12 Barur Tank 47 Gundar project system 

13 Tholudur Reservoir 48 Parthibanur Regulator 

14 Lower Bhavani project 49 Vaniar project 

15 Cauvery Mettur Project 50 Pambar Reservoir project 

16 Mettur Canal 51 Ichambadi Anicut Scheme 

17 Sathanur projects 52 Noyyal Rreservoir Scheme 

18 Shembarampakkam Tank 53 Kalavarpalli Reservoir scheme 

19 Manimuthar projects 54 Thumbalahalli Reservoir project 

20 kattalai project system 55 Thoppiar Reservoir project 

21 New kattalai High Level Canal 56 Kesari Gulihalli Reservaoir projects 

22 Pullambadi Canal 57 Nagavathi Reservoir project 

23 Vaigai Project 58 Shulagiri Chinnar project 

24 Neyyar project 59 Tamaraparani Anicut system 

25 Manjalar project 60 Vallar Anaicut System 

26 Ponney project 61 Nanjiyar Reservoir scheme 

27 Cheyyar project 62 Anaimaduvu Reservoir Project 

28 Arakkankottai Channel 63 Kariakoil Reservoir Project 

Source: Government of Tamil Nadu. 

227

Appendix 6.1: Status of Self Help Groups in Tamil Nadu: Physical and Financial 

Achievements 

Details 

Beginning of 

Tenth Plan (as on 

End of Tenth Plan 

(as on 31.3.2007) 

31.3.2002) 

1. Total No. of SHGs 105826 337744 

2. Total No. of Group Members (in lakh) 18.21 54.32 

3. No. of Rural Groups 88121 273255 

4. No. of Rural Group Members 1517683 4426731 

5. No. of Urban Groups 17705 64489 

6. No. of Urban Group Members 303091 1006028 

7. Total Savings (Rs. in crore) 175.85 1382 

8. Credit Rated Groups 304051 

9.Credit Linked Groups 273098 

10. Amount of Loan Disbursed (Rs. in 

crore) 2 337.79 

Source: Tamil Nadu Corporation for Development of Women. 

Note: SHGs: Status of Self Help Groups. 

228

Appendix Table 7.1: Indices for District-wise Allocations according to Relative 

Deficiency 

(Percent) 

Districts 

LEB at 

Birth 

(2006) 

Literacy 

Rate (2004- 

05) 

GER 

Real Per 

capita GDDP 

(2002-03) 

PPP 

Chennai 82.45 79.57 94.43 47.64 

Kanchipuram 91.85 82.04 93.09 64.22 

Thiruvallur 92.98 83.09 93.82 66.33 

Caddalore 97.17 87.67 91.55 90.41 

Villupuram 96.72 94.50 99.84 100.00 

Vellore 97.62 86.48 97.45 85.07 

Thiruvannamalai 97.40 91.21 100.00 96.69 

Salem 94.68 93.66 91.63 82.53 

Namakkal 99.43 91.77 84.06 76.59 

Dharmapuri 99.43 100.00 96.78 93.71 

Erode 95.70 93.86 93.47 73.25 

Coimbatore 94.90 82.69 86.00 58.35 

The Nilgiris 95.70 78.30 99.08 79.92 

Tiruchirapalli 91.73 90.71 92.27 84.16 

Karur 91.73 90.71 92.27 84.16 

Perambalur 97.28 94.08 94.64 84.57 

Thanjavur 97.06 83.54 95.56 90.75 

Thiruvarur 96.15 82.73 94.69 92.35 

Nagapatinam 93.88 82.74 92.70 89.02 

Pudukkottai 96.94 87.86 94.19 91.40 

Madurai 95.36 81.02 86.48 76.39 

Theni 100.00 87.51 88.14 68.96 

Dindigul 99.89 89.64 92.85 78.76 

Ramanathapuram 99.66 86.50 95.36 85.09 

Virudhunagar 99.89 85.35 91.50 59.08 

Sivaganai 99.43 86.88 93.02 88.45 

Thirunelveli 97.51 82.66 88.93 77.59 

Thoothukudi 89.92 77.79 94.71 69.87 

Kanniyakumari 96.26 71.78 89.75 84.35 

Krishnagiri 97.06 100.00 98.81 93.71 

Source: Based on Indices of Relevant Indicators (Table 4.1). 

229

230

ANNEXURES 

231

Annexure 1.1 

POVERTY MEASURES: AXIOMATIC FRAMEWORK: DEFINITIONS 

Focus Axiom 

Focus Axiom: P (x; z) – P (y; z) whenever x ε D is obtained from у ε D by an increment to a nonpoor 

person. 

Replication Invariance Axiom 

Replication Invariance Axiom: P (x; z) = P (y; z) whenever x is obtained from y by a (k-) replication. 

Continuity and Restricted Continuity Axioms 

Continuity Axiom: P (x; z) is continuous as a function of x on D for any given z. 

Restricted Continuity Axiom: P (x; z) is left continuous as a function of x i on D (z). This can also be 

phrased as requiring P (x; z) to be continuous in x,; in the neighborhood of x. 

Symmetry Axiom 

Symmetry Axiom: P (x; z) = P (y; z) whenever x ε D is obtained from y ε D by a permutation. 

Weak and Strong Monotonicity Axiom 

Weak Monotonicity Axiom: P (x; z) > P (y; z) whenever x ε D is obtained from y ε D by a simple 

decrement to a poor person. 

Strong Monotonicity Axiom: P (x; z) 

increment to a poor person. 

Minimal and Weak Transfer Axioms 

Minimal Transfer Axiom: P (x; z) P (y; z)] whenever x ε D is obtained from y ε 

D by a progressive (regressive) transfer between two poor persons with no one crossing the poverty 

line as a consequence of the transfer. 

Weak Transfer Axiom: P (x; z) P (y; z)] whenever x ε D is obtained from y ε D 

by a progressive (regressive) transfer with at least the recipient (donor) being poor with no one 

crossing the poverty line as a consequence of the transfer. 

Regressive and Progressive Transfer Axioms 

Regressive Transfer Axiom: P (x; z) > P (y; z) whenever x ε D is obtained from y ε D by a regressive 

transfer with at least the donor being poor. 

Progressive Transfer Axiom: P (x; z) 

progressive transfer with at least the recipient being poor. 

232

Monotonicity Sensitivity Axiom 

Monotonicity Sensitivity Axiom: P (x∪; z) – P (x; z) > P (x∪; z) – P (x; z) whenever x and x ε D 

are obtained from y ε D by the same amount of decrement to poor incomes y i and y j , respectively, 

where y i < y j . 

Transfer Sensitivity Axiom 

Transfer Sensitivity Axiom: P (x; z) 

composite transfer (FACT): a progressive transfer of income δ (> 0) from y 1 , i.e., x = y + δ (e i - e j ) 

+ ρ (e 1 - r k ) with σ 2 (y; z), = σ 2 (y; z) y i < y j ≤ y k ≤ y 1 z, and x i ≤ x j ≤ x k < k 1 < z. 

233

Annexure 1.2 

POVERTY LINE: CONCEPT AND MEASUREMENT 

a. Absolute and Relative Thresholds 

In most measurement exercises, there is a sharp dividing line below which a person is 

counted as poor. This divider is often called the “poverty line”. The general approach to 

specifying a poverty line is to estimate the cost of a bundle of goods deemed to assure 

that basic consumption needs are met. For developing countries, the most important 

component of a basic needs poverty line is the food expenditure necessary to attain a 

specified food energy intake, which may be augmented by an allowance for non-food 

needs. 

Setting food energy requirements, however, is quite problematic. There is little 

direct evidence on energy requirements. One widely used procedure (FAO/WHO/UNO 

1985) is to take energy requirements relative to alternative levels of activity and body 

weight. Activity levels may be endogenous socio-economic variables rather than 

exogenous physiological variables. A normative judgment needs to be made about 

desirable activity levels, so that corresponding energy requirements may be determined. 

Another problem relates to measuring the cost of the normative nutritional 

requirement, and in making provision for non-food consumption. A popular and often 

preferred method is to find the consumption expenditure at which a person is expected 

to attain the food energy requirement. This can be estimated from establishing a 

relationship between food intake and consumption expenditure. Depending on how the 

relevant norms are defined, the poverty line can be determined. Many a time, the 

poverty line is defined with reference to absolute norms that are exogenously specified. 

However, the relationship between food energy intake and consumption or 

income is not going to be the same across sub-groups or dates, and it shifts according to 

differences in income, tastes, activity levels, relative prices, levels of publicly provided 

goods, and other relevant factors. 

Some other methods aim to directly measure the cost of a normative food and 

non-food consumption bundle. The food bundle is related to the nutritional requirement, 

consistent with the tastes of the poor. Data on food prices are used for valuation. Setting 

the non-food component is more difficult. If non-food prices are not available, a 

reasonable choice [Ravallion (1993a), Ravallion and Bidani (1994)] for the non-food 

234

component of the poverty line is the expected non-food spending of those who are 

capable of reaching the food component. However, normative judgements would still be 

needed. 

An internationally popular poverty line is the World Bank’s “Dollar-a-day” 

threshold. The number of people living in households wherein the daily consumption per 

head is less than (PPP) $1 a day in constant 1985 PPP dollars are labelled as poor. This 

threshold has been recently updated to $1.08 in 1993 PPP dollars, but is still referred to 

as the dollar-a-day poverty level. For country-specific calculations, these would be 

converted into the local currency in 1993, and then updated using a consumption 

deflator. 

The generally preferred indicator of household living standards is a suitably 

comprehensive measure of current real consumption, given by a price-weighted 

aggregate over all marketed commodities consumed by the household from all sources. 

This is preferred to current income for two reasons. Current consumption rather than 

current income is a better indicator of standard of living, assuming that within-period 

utility depends directly on within-period consumption. Secondly, current consumption is a 

better indicator of long-term average well-being as it incorporates information about 

incomes in the past and those expected at future dates. 

In most societies the notion of what constitutes “poverty” goes beyond the 

attainment of the absolute minimum needed for survival. Hence poverty lines assume a 

relative character. Poverty lines are also defined in relative terms, in relation, for 

example, to the mean income of a country. For many policy purposes, the precise 

location of some poverty line may not be so material as the poverty comparison across 

dates and sub-groups. 

The relative poverty line is often considered useful in a cross-national context, 

where this approach would suggest choosing a poverty line that varies with each 

country’s average income. A commonly used choice is to set the poverty line at a 

common percentage of median income. Relative poverty comparisons are primarily 

comparisons of the dispersion of income at the low end of the distribution. During a 

recession, an absolute measure of poverty might indicate that poverty is increasing while 

a relative measure of poverty may indicate that it is abating. Relative poverty measures 

imply that every society, except those where everyone receives exactly the same income, 

235

would have some poverty. Hence, a society may have relative poverty and at the same 

time have no absolute poverty. 

The existence of a relative element in the nature of poverty has long been 

recognised. For example, Adam Smith had observed that ‘necessaries’ include ‘not only 

the commodities which are indispensably necessary for the support of life, but whatever 

the custom of the country renders it indecent for creditable people, even of the lowest 

order, to be without’. Recent measurement approaches derive the relative poverty line 

(z*) more directly from information on incomes in the society in question, without the 

need to specify or estimate the cost of a basket of necessities, i.e., z* = f(s), z* = g(y min , 

y), z* = h(y), where the income information used may be on social security payment 

rates (s), perceptions of minimally adequate income (y min ) and/or actual incomes 

themselves (y). 

Relative poverty measures do not reflect the well being of those who are poor. A 

person may be relatively poor but may or may not be absolutely poor. It is also difficult 

to interpret an improvement in relative poverty. There may be a reduction in relative 

poverty along with an increase in absolute poverty. Similarly, relative poverty may 

increase while absolute poverty may decline. Relative measures are not so useful for 

policy makers who are concerned with reducing the number or intensity of absolute 

poverty. However, changes in relative poverty do provide useful information on changes 

in the degree of inequality. 

Combining absolute and relative poverty lines, attempts have been made to 

construct ‘hybrid poverty thresholds’. For example, Foster (1998) has considered that 

hybrid poverty thresholds depend both on an absolute and a relative standard. He 

proposed a hybrid poverty line as weighted geometric average of a relative threshold z r = 

ρ 1−ρ 

αr and an absolute threshold z a , namely, z = z r 

z a 

, where 0 < ρ < 1. A hybrid line like 

this has the property that a 1 percent increase in the living standard ‘r’ leads to a ‘ρ’ 

percent increase in the poverty line, where ‘ρ’ is the elasticity of the poverty line with 

respect to the living standard. Fisher (1995) had termed this the income elasticity of the 

poverty line. It is also possible to interpret ρ = (dz/dr)(r/z) as a measure of the extent to 

which a given threshold ‘z’ is relative. When ρ = 0, z corresponds to an absolute poverty 

line, and when ρ = 1, it is a relative poverty line. 

236

Fuchs (1969), while advocating the relative approach had argued that the 

threshold should be recognised as a national value judgement and should be arrived at 

through the normal political process. Foster argues that, in this context, the relevant 

subject of public discussion would be the determination of the income elasticity of the 

poverty line, which is linked to the question as to the extent to which the poor should 

share in economic growth. The National Research Council of the National Academy of 

Sciences has proposed the hybrid standard at ρ = 0.65 (Citro and Michael, 1995 p. 143). 

b. From Individual to Household Poverty Lines 

The poverty line per person is usually defined with reference to an adult person. To 

extend this to the household, adults and children are to be clubbed. This requires use of 

relevant equivalence scales. Equivalence scales are intended to reflect the extent to 

which income must increase as household size increases in order to maintain the current 

level of well being. These equivalence scales consist of a set of numbers, E i , one for each 

household; ‘E i ’ is equal to the ratio of income for the i-th household to income for some 

reference household, such that the level of well being is the same in both households. ‘E i ’ 

can be thought of as the household size expressed as its equivalent in numbers of singleadult 

households, so that Y i /E i represents income per equivalent adult (or “equivalent 

income”). 

‘E’ could be allowed to depend on any of a number of characteristics of the 

household. Cutler and Katz (1992), have suggested scales of the following form: 

E(A i , C i ) = (A i + kC i ) e 

The poverty line for a household with ‘A’ adults and ‘C’ children (under the age of 

18) is E(A, C) times the poverty line for a lone-adult household. The constant ‘e’ 

represents the extent to which there are economies of scale in income sharing; the 

smaller is ‘e’, the greater is the extent of these economies. The constant ‘k’ allows the 

needs of children to differ from those of adults. Most researchers agree that ‘e’ should be 

greater than zero but less than one. Buhmann, et. al. (1988) suggest that e=0.75 is 

typical of scales used by “expert analysts” wishing to count numbers of low-income 

individuals. Blackburn (1994) has used e = 0.5 and k = 0.4. 

c. Alternative Poverty Measures 

Once a poverty threshold has been defined, the second step in measuring poverty 

requires aggregation of the shortfalls in income/consumption from the poverty threshold. 

237

A number of poverty “indexes” have been constructed in this kind of framework. Much of 

the initial work was done by Sen (1976, 1981), followed by Kakwani (1979), Thon 

(1979), and Takayama (1979). A recent measure which has gained considerable 

acceptance was proposed by Foster, Greer and Thorbecke (1984), known as the FGT 

index. Given the proliferation of poverty measures proposed in the literature, a number of 

survey papers have also appeared in the literature like Foster (1984), Seidl (1988), 

Chakravarty (1990), Sen (1979, 1983 and 1992), Kundu (1981) and Borooah (1991). A 

recent survey on poverty measurement (Zheng, 1997) provides a comprehensive analysis 

of the axiomatic framework behind different poverty measures explaining the properties 

of each poverty measure and the relationships among axioms and the poverty measures. 

While quite a number of poverty measures have been proposed in the literature, 

only a few have been used in actual practice. Most official estimates still use the head 

count ratio. Some of the important measures proposed in the poverty literature are 

considered below. 

The following symbols are used 

n = total population 

z = poverty line 

m = number of poor (below poverty line) 

y i = income (or other relevant indicator) of individual i 

µ = mean income of the whole population 

µ P = mean income of the poor 

Gp= Gini coefficient among the poor 

H = Head count ratio 

P = Poverty gap ratio 

Incomes are arranged in non-descending order: 

y 1 ≤ y 2 ≤ … ≤ y m < Z ≤ ym+1 ≤ … ≤ y n 

Most poverty measures can be seen as normalised weighted sums of poverty 

gaps, viz., 

m 

P = A Σ w 

t= 

1 

i 

(z − y ) + B 

i 

Some of the important poverty measures are defined below: 

(1) 

i. Head Count Ratio 

The head count ratio is defined as 

238

H = m/n (2) 

The head count ratio ignores the extent of poverty, distribution of income among the 

poor, mean and distribution of income of the non-poor. It is not sensitive to transfer of 

income from poor to rich or among the poor so long as the recipient does not cross the 

poverty line. 

ii. Poverty Gap Ratio 

The poverty gap ratio is defined as 

m 

P = Σ (z − y ) / mz = (z − µ ) / z 

(3) 

= 

t 1 

i 

P 

The poverty gap ratio measures the average depth of poverty relative to the poverty line. 

But it also ignores income distribution among the poor. It is also insensitive to income 

transfers among the poor so long as nobody crosses the poverty line. 

iii. Sen Index 

The Sen index is defined as 

2 

m 

P (Sen) = Σ ( m + 1)( z − yi 

) 

(4) 

(m + 1) nz i= 

1 

Viewed as a normalised weighted sum of poverty gaps [Equation 1], it implies that 

A = 2/(m+1) nz; B = 0, and w i = (m + 1-i) 

The Sen index ordinally ranks incomes of the poor according to their relative deprivation 

among the poor. The number of non-poor enter the term “A”, but not their income 

characteristics. It is a measure ‘focused’ on the distribution of income among the poor. 

The weighting scheme provides transfer sensitivity to the measures in the sense that if 

income is transferred from a poor to a higher income poor, poverty would increase 

provided the richer person does not cross the poverty line. 

The measure can also be written in the following form 

P (Sen) = H [1 – (1 – I) {1 – Gp.m/(m + 1)}] (5) 

where I is the income gap ratio and G p is the Gini-coefficient of incomes among the poor. 

iv. Takayama’s Poverty Measure 

Takayama attempted a translation of the Gini coefficient of income inequality into a 

poverty measure. 

2 

n 

* 

P (Takayama) = Σ ( n + 1 − i)( µ * − y i 

) 

(6) 

µ * n 

2 i= 

1 

239

where 

y 

y 

= y for y < z (i 1, ..., m) and 

* 

i i i 

= 

= z for y 

> z 

(i = m 

* 

i i 

+ 

1, ..., n) 

µ* is the mean income of the censored distribution. 

Takayama’s measure incorporates information about the non-poor also, except 

that it is defined over a censored distribution of income: y * i 

instead of the actual 

distribution y i . 

v. FGT Index 

One of the poverty measures, which has gained considerable popularity in recent years, 

proposed by Foster, Greer and Thorbecke (1984) is defined as follows: 

P ( α) 

= 

1 

n 

m 

⎛ z − y 

Σ ⎜ 

⎝ z 

i= 

1 

i 

α 

⎞ 

⎟ 

⎠ 

If α = 0, P (0) = n 

m , i.e., the head count ratio. 

(7) 

If 0 = 1, P (1) = H. (z - µp) 

A popular form in which P (α) class of measures is often used is 

1 

m 

P (2) = Σ [( z − y ) ] 2 

i 

/ z 

n i= 

1 

(8) 

As the value of α is increased, greater and greater weight is attached to the 

shortfall of income from the poverty line. 

240

Annexure 1.3 

UNIFORM RECALL PERIOD AND MIXED RECALL PERIOD 

Planning Commission, as the Government’s nodal agency, estimates the incidence of 

poverty at the national and state levels, on the basis of large sample survey on 

household consumer expenditure conducted by the National Sample Survey (NSS) 

Organisation approximately every five years. The provisional data of the latest NSS 61st 

Round for the year 2004-05 indicate that, the poverty ratio at the national level was 27.8 

percent if the Uniform Recall Period (URP, in which the consumer expenditure data for all 

the items are collected from a 30-day recall period) is used, and about 22 percent if the 

Mixed Recall Period (MRP, in which the consumer expenditure data for five non-food 

items, namely, clothing, footwear, durable goods, education and institutional medical 

expenses, are collected from a 365-day recall period, and the consumption data for the 

remaining items are collected from a 30-day recall period) is used. The corresponding 

URP-based poverty estimate for 1993-94 was 36.0 percent. The MRP-based poverty 

estimate of about 22 percent in 2004-05 is roughly but not strictly comparable with the 

poverty estimates of 26.1 percent in 1999- 2000. 

Annexure 1.4 

HUMAN POVERTY INDEX 

The human poverty index captures three dimensions of deprivation: economic, 

educational and health. It consists of a weighted average of (i) proportion of population 

below poverty line, (ii) proportion of population without access to safe drinking 

water/sanitation/electricity/medical attention at birth/vaccination and proportion of 

population living in kutcha houses, (iii) proportion of illiterate population and children not 

enrolled in schools, and (iv) proportion of population not expected to survive beyond the 

age of 40. Estimates are available for 1981 and 1991. Because of some changes in 

methodology, two sets of estimates were prepared for 1991: one comparable to 1991, 

and the other, incorporating the revised methodology. Census years are being used 

because several of the sub-indices require census data. 

241

Annexure 4.1 

TAMIL NADU DISTRICTS ADMINISTRATIVE ORGANISATION 

After Indian independence in 1947, the former British province of Madras Presidency 

became Madras State, renamed Tamil Nadu in 1968. The three princely states of Sandur, 

Banganapalle, and Pudukkottai were merged into Bellary, Kurnool, and Tiruchirapalli 

districts, respectively. In 1953 the eleven northern districts of Madras State became the 

new state of Andhra Pradesh, and Bellary District was divided between Andhra Pradesh 

and Mysore State (present-day Karnataka). Tamil Nadu acquired its present boundaries 

on 1 November 1956, when Dakshina Kannada and Malabar districts were ceded to 

Mysore and Kerala states, respectively, and Kanyakumari District of erstwhile Travancore- 

Cochin state was ceded to Madras State. 

In 1956, Madras State was made up of 13 districts: Chengalpattu, Coimbatore, 

Kanyakumari, Madras, Madurai, The Nilgiris, North Arcot, Ramanthapuram, Salem, South 

Arcot, Thanjavur, Tiruchirappallli, and Tirunelveli. 

• 1966: Dharmapuri District was split from Salem. 

• 14 January 1974: Pudukkottai formed from parts of Tiruchirappalli and Thanjavur. 

• 31 August 1979: Periyar District (present-day Erode) was split from Coimbatore. 

• 8 March 1985: Kamarajar (present-day Virudhunagar) and Pasumpon 

Muthuramalinga Thevar (present-day Sivaganga) districts were split from 

Ramanathapuram. 

• 15 September 1985: Dindigul District was split from Madurai. 

• 1986: Tirunelveli District split into Chidambaranar (present-day Thoothukudi) and 

Nellai-Kattabomman (later Tirunelveli-Kattabomman, present-day Tirunelveli) 

districts. 

• 30 Septermber 1989: North Arcot district was split into Tiruvannamalai-Sambuvarayar 

(present-day Tiruvannamalai) and North Arcot Ambedkar (present-day Vellore) 

districts. 

• 30 September 1993: South Arcot District was split into Cuddalore and Villupuram 

districts. 

• 1 November 1995: Karur and Perambalur districts were split from Tiruchirappalli 

District. 

• 1996: Names of districts changed: 

‣ Kamarajar became Virudhunagar; 

‣ Madras became Chennai; 

‣ Pasumpon Muthuramalinga Thevar became Sivaganga; 

242

‣ Periyar became Erode; 

‣ Tirunelveli-Kattabomman became Tirunelveli; 

‣ Tiruvannamalai-Sambuvarayar became Tiruvannamalai; 

‣ Chidambaranar became Tuticorin, later Thoothukudi; 

‣ North Arcot Ambedkar became Vellore. 

‣ 1 January 1997: 

‣ Namakkal District was split from Salem District; 

‣ Theni District was split from Madurai District; 

‣ Nagapattinam and Thiruvarur districts were split from Thanjavur District. 

‣ 1999: Chengalpattu District was split into Kanchipuram and Thiruvallur 

districts. 

‣ 2000: Ariyalur District was split from Perambalur District. 

• 2003: Ariyalur District was merged with Perambalur District. 

• 2004: Krishnagiri District was split from Dharmapuri District. 

243

Annexure 4.2 

METHODOLOGY AND DEFINITIONS 

Index 

Population Below 

Age 6 

Birth Order 3 And 

Above 

Births Below Age 

20 

Under 5 Mortality 

Female Literacy 

Households Using 

Safe Drinking 

Water 

Households Having 

Toilet Facility 

Households 

Connected With 

Electricity 

Details (Data Based on 2001 Census) 

A larger proportion of the population in this age group signifies a higher level of 

young dependency ratio. Lower the proportion of this age group in the total, 

higher will be the index value and better will be the performance of the district 

Index Value (for d th district) = {Max (X 1d ) - X 1d }/{Max(X 1d )-Min (X 1d )} 

where X 1d signifies the proportion of population below 6 years in the d th district. 

A larger percentage of birth of order 3 and above implies higher fertility rates 

and a weak impact of family welfare programs. Lower the value of this index; 

the better it is for the district. 

Index = {Max(X 2d ) -X 2d }/{Max(X 2d )-Min(X 2d )} 

where X 2d = percentage of births of order 3 and above to the total no. of births 

in the d th district. 

This index accounts for the occurrence of pregnancies among women below the 

age of 20. Higher this percentage, greater the risks to maternal and child health 

and lesser the impact of family welfare programmes Index = {Max(X 3d ) - 

X 3d }/{Max(X 3d )-Min(X 3d )} 

where X 3d is the percentage of births to mothers below age 20 to the total births 

in the d th district 

The index measures the probability of dying for children under the age of five 

and serves as an indicator of child health status in the district. 

Index = {Max(X 4d ) - X 4d }/{Max(X 4d )-Min(X 4d )} 

where X 4d is the under 5 mortality rate in the d th district. 

The female literacy rate, measured as the proportion of women above the age 

of 7 who can read and write with some understanding of any language, serves 

as an indicator of human development in the district. 

Index = {X 5d - Min(X 5d )}/{Max(X 5d )-Min(X 5d )} 

where X 5d is the female literacy rate in the d th district. 

The index measures the proportion of households in the district having access to 

safe drinking water through any of the following 3 sources; tap, hand-pump and 

tube-well 


where X 6d measures the proportion of households using safe drinking in the d th 

district 

Households with access to pit latrine, water closet latrine or any other latrine are 

measured as a proportion of the total households in the district. 


where X 7d measures the proportion of households having any type of toilet 

facility using safe drinking water in the d th district. 

Since electricity serves many different purposes other than lighting such as 

cooking, the proportion of electrified houses to the total, serves as an indictor of 

development in the district. 

244


3 Or More ANC 

Visits 

During Pregnancy 


At Least 2 TT 

Injections 

Complete 

Immunization 

Coverage 

Immunization 

Dropout 

Contraceptive 

Prevalence Rate 


where X 8d measures the proportion of households connected with electricity in 

the d th district. 

Guidelines by the Ministry of family health and welfare recommend at least 3 

Ante Natal visits during pregnancy to expectant mothers. Higher the prevalence 

of such a practice better is it for the district. 

Index = {X 9d -Min (X 9d )}/{Max(X 9d )-Min(X 9d )} 

where X 9d is the percentage of women receiving 3 or more ANC visits during 

pregnancy in the d th district 

In India a high proportion of infant deaths occur owing to diseases such as 

tetanus infections. A preventive measure is to administer 2 doses of TT 

injections to expectant mothers during early stages of pregnancy. 

Index = {X 10d -Min(X 10d )}/{Max(X 10d )-Min(X 10d )} 

where X 10d is the percentage of women receiving at least 2 TT injections during 

pregnancy in the d th district 

Complete immunization requires children to receive BCG, Polio, DPT and Measles 

vaccines. This index measures the proportion of children in the age group 12 to 

23 months who have received complete immunization, in the district. Index = 

{X 11d - Min(X 11d }/{Max(X 11d )-Min(X 11d )} 

where X 11d is the proportion of children in the age group of 12 to 23 months 

completely immunized in the d th districts 

The Dropout rate measures the difference in the percentage of children 

receiving any vaccination and the % of children receiving all the prescribed 

vaccination. 

Index Value = {Max (X 12d ) - X 12d }/{Max(X 12d )-Min (X 12d )} 

where X 12d measures the percentage of children in the age group 12 to 23 

months not receiving complete immunisation in the d th district 

A high contraceptive prevalence rate indicates the success rate of the districts 

family planning programs. 

Index Value = {X 13d - Min(X 13d )}/{Max(X 13d )-Min (X 13d )} 

Where X 13d measures the contraceptive prevalence rate in the d dth district 

Composite Index 

The composite index is an average of all the aforementioned indices and thereby 

serves as an indicator of the level of development of a district with respect to 

the socioeconomic and demographic characteristics of the population 

Index = (1/13)* (Σ X id ) 

245

Annexure 4.3 

SOME MDG INDICATORS FOR SIVAGANGAI DISTRICT 

The second district considered for district level PRS is Sivagangai. Sivagangai district is an 

administrative district of Tamil Nadu in Southern India. The city of Sivagangai is the 

district headquarters. The district is bounded on the north by Trichy and Pudukkotai 

sdistrict, on the east and south by Ramanathauram district and on the west by 

Viruthunagar district. Sivagangai district has two revenue divisions namely Sivagangai 

and Devakotai. It has six taluks: Thirupathur, Karaikudi, Devakotai, Manamadurai, 

Ilayankudi and Sivagangai. The taluks consist of 522 revenue villages of which 

Sivagangai has more than 100 revenue villages. 

The geographical extent of the district is 4189 sq. km accounting for 3.22 

percent of the geographical area of Tamil Nadu state. Out of the total geographical area, 

land put to non-agriculture comes around 27.6 percent, forest area constitute 5.2 

percent, current fallow and other fallow lands constitute 33.3.5 percent which is very 

significant, and cultivable waste is around 4 percent. 

b1. Demographic Profile 

Total population of the district is 1153747 comprising 567805 males and 585542 females 

in 2001 (Table 4.1). Nearly 74 percent of the total population lives in rural area. The 

percentage share of SC social group was 16.4 percent and that of the SC group was 0.11 

percent in 2001. The density of the population was 275 persons per sq. km, lowest in the 

state. 

Majority of the population in the district derives their livelihood from activities 

related to agriculture and livestock rearing. The gross area under cultivation during the 

year 2004-05 was 111576 ha. The average size of agriculture land holding is 1.26 ha. 

The data reveals that most of the farmers belong to small and marginal category. The 

district is not blessed with perennial source of river water supply, the rainfed tank are the 

main source of irrigation. There are about 651 major tanks and 4260 minor tanks in the 

district. Next to tanks, irrigation wells help to irrigate crops to some extent. Paddy is the 

main crop cultivated in the district. Millets, groundnuts and sugarcane are also cultivated 

to a considerable extent. 

246

In Sivagangai, as per 2001 census, Kannangudi block has the highest workers 

participation rate (58.61). The blocks of Sakkotai (36.35) and Manamadurai (32.69) had 

very low level of workers participation rate (WPR) mainly because of low female WPRs of 

18.21 percent and 22.74 percent respectively. As many as six blocks had higher WPR 

than the district average of 43.4 percent. Out of twelve blocks, eight blocks had WPR 

more than the district average (53.33). It was below the district average in Sivagangai 

(52.46), Manamadurai (42.53) and Devakotai (42.09). The female WPR was 

unexceptionally high in Kannandugi block (54.97). It is below the state average (33.72), 

in Sakkotai (18.21), Manamadurai (22.74), Thiruppathur (31.00), Sivagangai (32.54) and 

Thirupuvanam (33.36) blocks. 

Sl. 

No. 

Table 4.1: Demographic Profile of Sivagangai District as per 2001 Census 

Block Population Sex 

Ratio 

247 

Density 

SC 

Population 

(percent) 

ST 

Population 

(percent) 

1 Sivagangai 134350 982 300.8 11.36 0.01 

2 Manamadurai 95535 989 273.4 21.04 0.87 

3 Kalayarkoil 96325 1078 165.3 16.56 0.13 

4 Thirupuvanam 102260 990 312.4 20.52 0.14 

5 Illayangudi 102721 1079 230.0 20.73 0.01 

6 Devakotai 106505 1081 313.3 18.23 0.01 

7 Sakkotai 195584 1004 555.2 10.56 0.22 

8 Thirupathur 97779 1051 287.7 14.94 0.02 

9 Singampunari 70787 990 313.2 13.72 0.02 

10 Kannangudi 29872 1091 134.8 36.93 0.08 

11 Kallal 82137 1095 204.8 16.14 0.05 

12 S.Pudur 39892 1035 249.0 16.83 0.01 

District 1153747 1035 275.1 16.37 0.15 

Source: Block Statistical Book 2004-05, District Statistical Hand Book 2005-06: Census 2001. 

Sivagangai is an administrative district of Tamil Nadu state in southern India. The 

city of Sivaganga is the district headquarters. The district occupies an area of 4086 km² 

and has a population of 1,155,356 (as of 2001). It is 28.22 percent urbanised. The 

district has a literacy of 72.66 percent, below the average for the state. It is bounded on 

the north and northeast by Pudukkottai District, on the southeast and south by 

Ramanathapuram District, on the southwest by Virudhunagar District, and on the west by 

Madurai District, and on the northwest by Tiruchirappalli District. Karaikudi is another 

important city in the district. Karaikudi known as the capital of Chettinad, which includes 

Karaikudi and the surrounding 74 villages. Chettinad is named for the prominent

"Nattukottai Chettiars" or Nagarathar. The Chettiars were a prosperous banking 

community who ventured overseas to do business in South and Southeast Asia in the 

19th and early 20th centuries. 

b2. Education 

Table 4.2 indicates block wise literacy rate for male and female population in Sivagangai 

district as per 2001 census. Both male and female literacy rates are much lower than the 

average for Tamil Nadu. The female literacy rate is particularly low at 53 but it is almost 

evenly distributed across the blocks. A gender disparity index of literacy can be calculated 

on this basis. In terms of gender disparity the most deficient block is Illayangudi followed 

by Thirupathur and then Sivagangai and Manamadurai. 

Table 4.2: Gender wise Literacy Rate and Gender Disparity Index of Literacy 

Among SCs in Different Blocks as per 2001 Census 

Block 

Male Female Total Gender Disparity 

Index of Literacy 

Sivagangai 64 53 59 0.21 

Manamadurai 63 52 58 0.21 

Kalayarkoil 62 54 58 0.15 

Thirupuvanam 64 55 60 0.16 

Illayangudi 65 51 58 0.27 

Devakotai 62 52 57 0.19 

Kannangudi 60 53 57 0.13 

Kallal 64 54 59 0.19 

Sakkotai 63 56 60 0.13 

Thirupathur 65 52 59 0.25 

Singampunari 61 54 58 0.13 

S. Pudur 62 55 59 0.13 

District 63 53 58 0.19 

Source: Annual Work Plan and Budget: 2005-06, Office of the Chief Education Officer, Sivagangai. 

In terms of gross enrolment ratio in primary and upper primary schools for boys 

and girls in all the blocks it is more than 100 for primary schools. In the upper primary 

schools only for girls it is indicated to be less than 100 for the district as a whole. Some 

of the blocks show deficiency in this respect like Kannangudi, Kallal, and S. Pudur. 

248

Table 4.3: Block wise Gender Wise Gross Enrolment Ratio in the Primary and 

Upper Primary Schools: 2003-04 

Block 

Primary 

Upper Primary 

Boys Girls Total Boys Girls Total 

Sivagangai 109 105 102 109 105 107 

Manamadurai 104 100 105 104 100 102 

Kalayarkoil 108 104 107 108 104 106 

Thirupuvanam 107 103 105 107 103 105 

Illayangudi 102 103 101 102 103 103 

Devakotai 106 102 105 106 102 104 

Kannangudi 106 102 102 106 86 104 

Kallal 101 101 100 101 89 101 

Sakkotai 104 102 104 104 118 103 

Thirupathur 104 108 116 104 94 106 

Singampunari 105 101 105 105 116 103 

S. Pudur 105 101 102 105 90 103 

District 105 103 105 105 96 104 


Table 4.4 gives dropout rates for the district as a whole and for different blocks. 

For primary as well as upper primary schools the dropout rate for boys is higher than that 

for girls. For some blocks like Kalayarkoil, Manamadurai, and Singampunari the dropout 

rates are considerably higher than the districts. 

Table 4.4: Sivagangai: Gender Wise Dropout Rates in Primary and Upper 

Primary Schools (2003-04) 

Block 

Primary 

Upper Primary 

Boys Girls Boys Girls 

Sivagangai 5 1 6 3 

Manamadurai 18 20 7 9 

Kalayarkoil 20 16 6 6 

Thirupuvanam 9 8 13 9 

illayangudi 5 5 4 4 

Devakotai 3 5 4 2 

Kannangudi 1 1 

Kallal 2 2 5 3 

Sakkotai 5 5 7 3 

Thirupathur 7 7 5 5 

Singampunari 11 11 7 6 

S.pudur 4 4 

District 9 8 6 5 

Source: Annual Work Plan and Budget: 2004-05(p-46), Office of the Chief Education Officer, 

Sivagangai. 

249

Table 4.5 gives the pupil-teacher ratio and pupil-school ratio at primary and 

upper primary levels. Relative to the district average some of the disadvantaged blocks 

are Kannangudi, Kalayarkoil, Manamadurai, and Thirupathur. 

Table 4.5: Pupil-teacher Ratio and Pupil-school Ratio at Primary School 

and Upper Primary School Levels during 2004-05 

S.No. 

Block 

Primary 

Pupilteacher 

Ratio 

Pupilschool 

Ratio 

Upper Primary 

Pupil-teacher 

Ratio 

Pupil-school 

Ratio 

1 Sivagangai 38 124 31 158 

2 Manamadurai 39 120 29 212 

3 Kalayarkoil 33 87 28 167 

4 Thirupuvanam 46 139 28 156 

5 Illayangudi 40 106 27 162 

6 Devakotai 40 131 27 181 

7 Kannangudi 25 71 34 90 

8 Kallal 30 94 28 128 

9 Sakkotai 50 242 30 199 

10 Thirupathur 39 105 32 191 

11 Singampunari 45 113 36 195 

12 S.pudur 50 89 44 185 

Total 40 122 30 171 


Table 4.6 gives the percentage of trained teachers in total number of teachers 

for primary and upper primary levels. While the district average is 91 for trained primary 

teachers, the disadvantage blocks are Sivagangai, Devakotai, Kannangudi and Sakkotai. 

In the case of upper primary schools, the district average is only 66.6 percent in terms of 

availability of trained teachers. The relatively deficient blocks are Sakkotai, 

Thirupuvanam, and Kalayarkoil. 

250

Block 

Table 4.6: Trained Teachers at Primary and Upper Primary 

Schools in Sivagangai: 2004-05 

Total No. of 

Teachers 

Primary 

No. of 

Trained 

Teachers 

Percent 

of 

Trained 

Teachers 

Total 

No. of 

Teachers 

Upper Primary 

No. of 

Trained 

Teachers 

Percent 

of 

Trained 

Teachers 

Sivagangai 410 250 60.98 308 254 82.47 

Manamadurai 255 256 100.39 206 129 62.62 

Kalayarkoil 318 328 103.14 219 124 56.62 

Thirupuvanam 242 253 104.55 213 105 49.30 

Illayangudi 265 292 110.19 207 140 67.63 

Devakotai 229 147 64.19 245 251 102.45 

Kannangudi 85 66 77.65 34 44 129.41 

Kallal 236 234 99.15 162 99 61.11 

Sakkotai 437 345 78.95 428 191 44.63 

Thirupathur 233 240 103.00 163 106 65.03 

Singampunari 164 166 101.22 115 79 68.70 

S.pudur 85 109 128.24 59 50 84.75 

District 2959 2686 90.77 2359 1572 66.64 


b3. Health 

Some of the health indicators are available at the level of detail of primary health centres. 

Table 4.7 gives IMR for different PHCs for the period from 2002-05. For the district as a 

whole IMR has ranged between 21.3 to 22.9 per thousand of live births. There is an 

improvement over time. Some of the noticeable PHCs where the IMR is considerably 

higher than the district average are: Arasanur, Thamarakki and Neerkuppai, Mallakottai 

251

Table 4.7: PHC wise Infant Mortality Rate (IMR) and its rank order of 

Sivagangai District for the year 2002 to 2005 

SI. 

No 

Block 2002 2003 2004 2005 Avg Rank 

1 Keelapongudi 27.78 29.01 22.30 30.46 27.39 35 

2 Idayamelur 36.96 26.20 34.60 28.99 31.69 39 

3 Arasanur 42.08 38.25 27.30 26.90 33.63 42 

4 Thamarakki 35.09 48.65 31.90 14.93 32.64 41 

5 Muthanendal 12.06 15.35 20.00 18.33 16.43 13 

6 Periyakottai 23.48 15.58 25.00 21.33 21.35 22 

7 Thanjakkore 4.08 14.08 30.10 45.45 23.43 28 

8 Kombukkaranendal 37.04 33.54 40.20 16.50 31.82 40 

9 kallyarkoil 23.31 26.75 23.10 18.67 22.96 27 

10 Maravamangalam 19.70 20.23 29.10 35.52 26.14 32 

11 Sastharasankottai 20.83 15.79 6.80 6.67 12.52 5 

12 Nattarasankottai 18.46 35.03 22.10 39.09 28.67 36 

13 Kalayarmangalam 19.61 13.25 0.00 16.39 12.31 4 

14 Panganery 26.42 11.49 30.30 21.93 22.53 25 

15 Poovanthi 25.20 29.17 33.20 20.30 26.97 34 

16 Palayanur 25.34 36.82 31.20 12.17 26.38 33 

17 Thirupuvanam 25.04 18.71 22.10 23.30 22.29 24 

18 Konthagai 37.65 32.79 23.40 23.53 29.34 37 

19 Salaigramam 16.03 23.90 24.20 16.72 20.21 18 

20 Thayamangalam 20.11 14.01 11.60 16.72 15.61 11 

21 Sooranam 13.70 24.75 16.00 18.07 18.13 15 

22 Thiruveganpet 11.76 4.57 4.20 16.33 9.21 2 

23 Velayuthapattinam 24.63 14.93 24.60 20.41 21.14 21 

24 ShanmuganathaPuram 9.23 9.32 9.30 12.31 10.04 3 

25 Kulamangalam 6.54 10.31 14.90 3.64 8.85 1 

26 Monni Karmangudi 3.16 23.03 13.40 12.74 13.08 8 

27 Puduvayal 22.73 8.91 15.70 16.04 15.85 12 

28 Peerkalaikadu 29.28 29.15 6.60 19.42 21.11 20 

29 Kottaiyur 9.07 19.61 9.30 12.22 12.55 6 

30 O Siruvayal 10.66 23.99 10.30 5.33 12.57 7 

31 Neerkuppai 53.53 42.25 33.60 14.74 36.03 44 

32 Keelaselvalpatti 14.52 36.25 16.20 8.97 18.98 17 

33 Thirukostiyur 19.08 13.80 10.10 17.57 15.14 10 

34 Sevanipatti 10.58 17.82 22.80 20.30 17.89 14 

35 Piranmalai 25.30 25.39 24.60 21.12 24.10 29 

36 Mallakottai 47.62 28.57 33.70 26.67 34.14 43 

37 M.Surakudi 25.57 15.02 24.20 21.94 21.68 23 

38 Kannangudi 37.74 15.27 18.10 28.63 24.93 31 

39 Sembanur 14.44 18.02 26.20 14.55 18.30 16 

40 Kandramanickam 40.82 39.01 21.30 22.56 30.92 38 

41 Maruthangudi 33.16 18.18 21.60 10.61 20.89 19 

42 Kundrakudi 5.75 27.03 11.60 14.53 14.73 9 

43 V Pudur 17.90 11.46 44.20 17.95 22.88 26 

44 Pulithipatti 26.13 22.39 16.70 33.33 24.64 30 

District 22.94 22.67 21.31 19.63 21.64 

Source: Vital Events Report, Deputy Director of Health Services, Sivagangai. 

252

Annexure 5.1 

ENVIRONMENTAL CONSEQUENCES OF EXCESS USE OF FERTILIZERS 20 

The excess use of fertilizers can cause serious problems: 21 

1. N is a mobile nutrient both in plants and soils. Surface runoffs of N cause 

unacceptable levels of bacteria and synthetic organic components. Leaching of N 

from the agricultural fields can elevate concentration in the groundwater level (i.e., 

contaminating groundwater). 

2. Surplus N in the sap of crop will harm the plant growth because each plant grows 

well only with narrow bandwidth of soil nitrates. 

3. N content in chemical fertilizers such as urea is around 40 per cent. A plant should 

consume it within three hours. Otherwise a sizeable amount of (surplus) N could be 

added to the environment (atmosphere) as ammonia by volatilization from soil 

surface, nitrous oxide or elemental nitrogen by denitrification. 22 

4. The ammonia going into the atmosphere contributes to the acid rains, while N 2 O is 

involved in the depletion of ozone layer. 

5. Phosphates do not leach readily as N because they are more tightly bound to soil 

particles. That is, they get fixed in the soil as insoluble compounds. However, they 

could leach from very light soils and move with eroded surface soil to surface waters 

such as lakes and ponds. 

6. Both nitrogen and phosphorus eutrophication of lakes and ponds lead to excessive 

growth of aquatic plants (macrophytes). Overtime, if the process continues the 

reservoirs become with decaying mats of algae (phytoplankton), which create 

offensive odors and deplete the water of oxygen that may lead to death of fishes and 

other aquatic animal life. 

7. As regards flowing water, phosphorus is the limiting nutrient. When all phosphorus is 

used, plant growth ceases irrespective of the amount of nitrogen available. Thus only 

if adequate phosphorus is available, increasing concentration of nitrates will lead to 

algal and macrophyte growth. 

20 Farmers could also use pesticides more intensively because of intensive crop production that has led to an increased 

potential for damage by pests/diseases. Pesticides kill not only the pest concern but also a wide range of other organisms 

including beneficial insects and other pest predators. A drawback is the development of resistance in species. Some 

pesticides are highly soluble in water, and they may leach to groundwater underlying farming regions. 

21 For many researchers, the pollution caused by fertilizers is the major concern. They refer it as a ‘chemical time bomb’ 

and suggest for immediate land management to overcome this. 

22 About 20 per cent of N is available in the atmospheric air. But plants cannot directly consume it. Only bacteria can 

consume the atmospheric N and convert it in to Nitrate and fix it in to the soil. Afterwards the plants can consume it. 

253

8. Underground water is the major source of drinking water.. The safe limit or MCL 

(maximum contamination level) established by the US Environmental Protection 

Agency is 45 mg/l for NO 3 or 10 mg/l for NO 3 -N. The European Union has fixed MCL 

limit at 50 mg/l for NO 3 or 11 mg/l for NO 3 -N. Levels above this may lead to 

methaemoglobinaemia or blue baby syndrome. This is due to the conversion of 

haemoglobin to methaemoglobin due to nitrites formed from nitrates ingested with 

drinking water. Haemoglobin is involved in transport of oxygen in the body, while 

methaemoglobin cannot and thus the patient suffers from anexia (lack of oxygen). 

There are some indications that excess nitrates in the human body may react with 

amines and form nitrosamines that may lead to gastric cancer. 

9. Plants having surplus nitrates are unsuitable for human consumption. Nature has 

developed pests to attack such plants and check the food quality. Not knowing this, 

farmers use pesticides that poisoned the whole ecology and produced only resistant 

pests forcing the farmers to use stronger (toxic) pesticides each year. Continuous use 

of chemical pesticides results in accumulation of toxic substances in the soil. It 

contaminates harvests, destroys soil and ecological balance. 

10. Excess application of K decreases “Vitamin C” (ascorbic acid) and carotene content in 

vegetables/fruits. 

254

Annexure 6.1 

NOTES ON SELECTED CENTRALLY SPONSORED SCHEMES 

1. Aam Admi Bima Yojana 

Under a new scheme called “Aam Admi Bima Yojana” (AABY), launched on October 2, 

2007, insurance to the head of the family of rural landless households in the country will 

be provided against natural death as well as accidental death and partial/permanent 

disability. This cover is Rs. 75,000 on death due to accident and permanent disability due 

to accident, Rs. 37,500 in case of partial permanent disability due to accident and Rs. 

30,000 in case of death of a member, prior to terminal date. The premium to be charged 

under the scheme is Rs. 200 per annum per member, 50 percent of which is to be 

contributed by the Central Government and remaining by State Governments. 

2. Rashtriya Swasthya Bima Yojana 

The Rashtriya Swasthya Bima Yojana was formally launched on October 1, 2007. All 

workers in the unorganized sector who come in the category of Below Poverty Line (BPL) 

and their families will be covered under the Scheme. The scheme also has a provision of 

smart card to be issued to the beneficiaries to enable cashless transaction for health 

care. Total sum insured would be Rs. 30,000 per family per annum with Government of 

India contributing 75 percent of the annual estimated premium amount of Rs. 750 

subject to a maximum of Rs. 565 per family per annum while State Governments are 

expected to contribute 25 percent of the annual premium as well as any additional 

premium. The cost of smart card would also be borne by Central Government. 

3. National Old Age Pension Scheme (NOAPS) 

Under the Scheme, the Central Government provides Rs. 200 per month of financial 

assistance per beneficiary. The eligibility for people 65 years and above and belonging to 

a household below the poverty line. The scheme is administered by the Ministry of Rural 

Development. 

4. Sampoorna Grameen Rozgar Yojana (SGRY) 

The Sampoorna Grameen Rozgar Yojana (SGRY) was launched on September 25, 2001. 

The objective of the programme is to provide additional wage employment in the rural 

areas as also food security, alongside creation of durable community, social and 

economic infrastructure in the rural areas. In 2007-08 up to December 31, 2007, the 

number of person-days of employment generated under SGRY was 11.60. Under the 

special component, about 0.55 lakh tonnes of foodgrain have been released to calamity 

255

hit States in the current year up to December 2007. SGRY programme in 330 districts has 

already been subsumed in National Rural Employment Guarantee Scheme (NREGS) (200 

districts in first phase during the year 2006-07 and 130 additional districts in second 

phase during 2007-08). SGRY programme is being entirely subsumed in NREGS with 

effect from April 1, 2008. 

5. Swarna Jayanti Shahari Rozgar Yojana (SJSRY) 

In December 1997, the Urban Self-Employment Programme (USEP) and the Urban Wage 

Employment Programme (UWEP), which are the two special components of the Swarna 

Jayanti Shahari Rozgar Yojana, were substituted for various programmes operated earlier 

for urban poverty alleviation. Cumulative coverage of beneficiaries under the Community 

Structure Component was 358.13 lakh up to end of November 2007. 

6. Ujjawala Scheme for Prevention of Trafficking and Rescue, Rehabilitation 

and Reintegration of Victims of Trafficking for Commercial Sexual 

Exploitation 

The Scheme was launched on December 4, 2007. It has five components namely, 

prevention, rescue, rehabilitation, reintegration and repatriation. 

7. Rajiv Gandhi National Drinking Water Mission 

This programme was introduced as one of the five Societal Missions in 1986 and was 

called the National Drinking Water Mission. It was renamed as Rajiv Gandhi National 

Drinking Water Mission in 1991. 

8. National Rural Health Mission 

The National Rural Health Mission was launched on April 12, 2005, to provide accessible, 

affordable and accountable quality health services to the poorest households in the 

remotest rural regions. 

9. Jawaharlal Nehru National Urban Renewal Mission (JNNURM) 

JNNURM, which is for a seven-year period from 2005-06, has two main components – 

Basic Services to the Urban Poor (BSUP) Programme and Integrated Housing & Slum 

Development Programme (IHSDP). BSUP was launched to assist cities and towns in 

taking up housing and infrastructural facilities for the urban poor in 63 selected cities in 

the country. IHSDP, which was launched simultaneously with BSUP in December 2005, is 

taking up housing and slum upgradation programmes in non-BSUP cities. 

256

10. Kasturba Gandhi Balika Vidyalaya (KGBV) 

The Kasturba Gandhi Balika Vidyalaya (KGBV) scheme was launched in July 2004 for 

setting up residential schools at upper primary level for girls belonging predominantly to 

the SC, ST, OBC and minority communities. The Kasturba Gandhi Balika Vidyalaya 

scheme ran as separate scheme for two years but was merged with Sarva Shiksha 

Abhiyan w.e.f. April 1, 2007. 

11. Revised National Tuberculosis Control Programme (RNTCP) 

The Revised National Tuberculosis Control Programme (RNTCP) using Directly Observed 

Treatment Short course (DOTS) is being implemented with the objective of curing at 

least 85 percent of the new sputum positive patients initiated on treatment, and 

detecting at least 70 percent of such cases. Good quality assured anti-TB drugs are 

provided in the patient-wise drug boxes, free of cost. Pediatric Patient Wise Drug Boxes 

have been introduced in the programme from January 2007. The treatment success of 

new infectious TB cases under RNTCP has consistently exceeded the global benchmark of 

85 percent. The national programme has initiated the DOTS plus services for 

management of Multi drug resistant TB (MDR-TB). 

257

MSE Monographs 

* Monograph 1/2006 

A Tract on Reform of Federal Fiscal Relations in India 

Raja J. Chelliah 


Employment and Growth 

C. Rangarajan 


The Importance of Being Earnest about Fiscal Responsibility 

C. Rangarajan and Duvvuri Subbarao 


The Reserve Bank and The State Governments: Partners in Progress 

Y.V.Reddy 


India’s Dilemmas: The Political Economy of Policy-Making in a Globalized World 

Kaushik Basu

MSE Working Papers 

Recent Issues 

* Working Paper 43/2009 

Climate Sensitivity of Indian Agriculture 

K.S. Kavi Kumar 


Finance Commission and The Southern States: Overview of Issues 

D.K.Srivastava 


Data Requirements and Statistical Challenges for Designing Climate Friendly Energy Policies in 

Multilateral Framework 

U.Sankar 


Causality Between Foreign Direct Investment and Tourism: Empirical Evidence from India 

Saroja Selvanathan, E.A. Selvanathan and Brinda Viswanathan 


Ecology, Environment and Sustainable Development in Indian Fiscal Federalism 

U.Sankar 


Revenue-Expenditure Nexus for Southern States: Some Policy Oriented Econometric Observations 

Kausik Chaudhuri and Bodhisattva Sengupta 


MNEs and Export Spillovers: An Analysis of Indian Manufacturing Industries 

Chiara Franco and Subash Sasidharan 


Reforming Indirect Taxes in India: Role of Environmental Taxes 

D K Srivastava and C Bhujanga Rao 


The Value of Improved Public Services: An Application of the Choice Experiment Method to Estimate 

the Value of Improved Wastewater Treatment Infrastructure in India 

Ekin Birol and Sukanya Das 


Measuring Accuracy of Projections of Central Taxes by the Finance Commission 

D K Srivastava and C Bhujanga Rao 

* Working papers are downloadable from MSE website http://www.mse.ac.in 

$ Restricted circulation

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